Corinthian Colleges student loans to be forfeited, says Department of Education

They also discovered an obscure clause in the law governing loans: if borrowers were significantly misled by their school, they could ask the government to cancel their loans. Much like a bank appraises a house before issuing a mortgage, the Department of Education is supposed to make sure that the programs it lets pay for taxpayer-backed loans are legitimate.

The Debt Collective-backed Corinthian 15 has enlisted hundreds of students to flood the department with requests for loan relief through a program known as ‘Borrower Defence-Until-Repayment “. Tens of thousands of former Corinthian students eventually joined the action. In 2015 Arne Duncan, the then education secretary, announced that the government would cancel their loans.

But the process dragged on and by the time President Barack Obama left office, relatively few debts had been cleared. Betsy DeVos, who took over as secretary of education under President Donald J. Trump, froze the program and tried to cut aid for successful applicants.

Mr Biden reversed those decisions and some 100,000 former Corinthian students have already had their loans fully forgiven. Wednesday’s action will extend relief to hundreds of thousands more, who had not submitted Borrower Defense Claims. And those who have made payments on federal loans that are still outstanding will receive refunds for their previous payments, Education Department officials said Wednesday.

“It took a long time to come,” said Nathan Hornes, a Corinthian 15 member who attended Everest College in Ontario, California.

Latonya Suggs, another participant in the initial strike, said she had mixed feelings about the victory. “It took way too long,” she said. “I struggled for years with that.”

Tens of thousands of borrowers at dozens of different schools are still awaiting decisions on their borrower defense claims, some of which were submitted six years ago. About 200,000 applicants — including 130,000 turned down in the last year of the Trump administration — are part of a class action lawsuit seeking relief.


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