The Department of Education announced Monday that it is implementing a plan to forgive as much as $3.6 billion in student loans given to students attending schools affiliated with the defunct for-profit college chain Corinthian Colleges.
Corinthian was once one of the biggest players in for-profit colleges, but abruptly fell apart in 2014 amid accusations that it was inflating graduates’ job placement rates and attempting to defraud the federal government. In the course of the investigation, Corinthian lost the right to draw federal student loans, and since those loans provided the vast majority of its revenue, the college swiftly fell into bankruptcy. That left tens of thousands of students out in the cold, while the college itself has become a punching bag for those critical of alleged predatory behaviors by for-profit education companies.
Since then, many have called for the government to offer loan forgiveness for students they say were exploited by Corinthian. Notably, about 200 former students have taken part in a “debt strike,” refusing to make any payments on their student loans. The delinquent borrowers claim they were tricked by false job placement rates and also were never notified their schools were under a federal investigation placing them at risk of closure.
Ordinarily, student loans cannot be discharged in bankruptcy or forgiven without spending at least a decade on a federal repayment plan. Exceptions, however, exist for fraud and for schools that shut down. Previously, only a few thousand students still attending Corinthian when its last campuses closed in April were eligible to have their student loans forgiven. Under the newly-announced plan, any student attending a Corinthian-affiliated school after June 20 of last year will be eligible, ballooning the number of people eligible for forgiveness by tens of thousands.