President Joe Biden is set to cancel $5.8 billion in student loan debt for those who attended institutions run by Corinthian Colleges.
Founded in 1995, Corinthian Colleges was once among the largest for-profit education companies in the country. At its prime, it had over 100,000 students enrolled in over 35 states. However, the schools were found to engage in racist, predatory lending practices that preyed on lower-income Black and Latino Americans.
The company filed for Chapter 11 bankruptcy in 2015 after losing its federal funding, CNBC reported. However, hundreds of thousands of students still owed on their student loans.
The Biden Administration made the announcement about the debt cancellation on Wednesday, June 1.
“As of today, every student deceived, defrauded, and driven into debt by Corinthian Colleges can rest assured that the Biden-Harris administration has their back and will discharge their federal student loans,” said U.S. Secretary of Education Miguel Cardona said in a news release.
According to a report by the Predatory Student Lending Project, Corinthian Colleges ran “racially-targeted” campaigns – including spending over $600,000 for two weeks of ads on BET. As a result, a majority of students enrolled at the college were Black, Latino and female.
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“The debt associated with federally-funded for-profit colleges is not only predatory, it’s racist. That is because this industry targets its harmful products in explicitly racial terms,” the Predatory Student Lending report said.
“The industry claims to be increasing access to education and compares its schools to historically black colleges,” the report continued. “Whereas historically black colleges are authentic cornerstones of the African American community, forged at a time when higher education was legally denied to people on the basis of race, corporations like Corinthian target people on the basis of race, blatantly exploiting and profiting off of inequality. Nobody should confuse these two types of institutions.”
In 2020, a federal judge ordered the Department of Education to cancel the student loans of 7,200 former students of Corinthian Colleges in Massachusetts. It was not the first lawsuit brought against the company.
Corinthian Colleges was also sued by Vice President Kamala Harris in 2013 when she was the Attorney General of California and faced several other lawsuits. According to the news release about the student loan cancellations, “the Attorney General in California, Illinois, Massachusetts, Wisconsin, and 15 others … shared information that informed the Department’s findings.”
The Biden Administration also credited the Consumer Financial Protection Bureau (CFPB) for helping with its investigation. Students will not need to apply for the debt cancellation as it will be automatic and borrowers will be notified accordingly, the release says.
“For far too long, Corinthian engaged in the wholesale financial exploitation of students, misleading them into taking on more and more debt to pay for promises they would never keep,” Cardona said. “While our actions today will relieve Corinthian Colleges’ victims of their burdens, the Department of Education is actively ramping up oversight to better protect today’s students from tactics and make sure that for-profit institutions – and the corporations that own them – never again get away with such abuse.”
PHOTO: Students wait outside Everest College, Tuesday, April 28, 2015, in Industry, Calif., hoping to get their transcriptions and information on loan forgiveness and transferring credits to other schools. (AP Photo/Christine Armario)