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In order to close one of the most notorious cases of fraud in the history of education in the United States, the government of President Joe Biden decided to forgive all federal student debts of former students of the Corinthian Colleges chain.
Now, anyone who has attended the chain from 1995 until its collapse in 2015 will automatically have your federal student debt canceled.
With this decision, a total of $5 will be forgiven,800 million dollars in debt of more than 560,000 borrowers, in which the Department of Education says it’s the largest loan discharge in history.
“As of today, all students cheated, cheated ers and indebted by Corinthian Colleges can be sure that the Biden-Harris Administration has their back and will cancel their federal student loans,” said Secretary of Education Miguel Cardona.
“For too long, Corinthian dedicated himself to the wholesale financial exploitation of students, tricking them into becoming increasingly indebted. to pay promises that they would never keep”.
What was the fraud of Corinthian Colleges
In its heyday, Corinthian was one of the university companies with largest profit , with more than 100 campus and more than 110,000 students. However, the company closed in 1995 amid widespread findings of fraud.
The Obama administration, working with now Vice President Kamala Harris, who was California Attorney General at the time, discovered that dozens of campuses were falsifying data on the success of their graduates.
In some cases, schools reported that students had found jobs in their fields of study even though they were working in grocery stores or fast food chains.
Students commonly told researchers that were pressured to enroll with promises of lucrative employment , only to end up with huge debts and few job prospects.
Federal officials discovered that the company falsely told students before your course credits could be transferred to other universities.
The Obama administration promised to forgive loans to Corinthian students whose programs lied about job placement rates.
That administration continued to expand a process known as borrower defense for repayment, which allows any defrauded student to apply for debt cancellation.
But an explosion in applications for debt forgiveness, coupled with political battles over the process, created a backlog of years, leaving many alumni still waiting for relief.
How the relief will work
Tens of thousands of Corinthian alumni were already eligible for debt cancellation, but had to submit documents and navigate r for an application process that advocates say is confusing and not widely known. The relief will now become automatic and will be extended to additional borrowers.
Those with a remaining balance on their Corinthian debt will also receive refunds from the payments already made, department officials said. But the action does not apply to loans paid in full.
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