$5.8B Student Loan Debt Canceled

Inflation Reduction Act

The Biden administration said Wednesday that hundreds and thousands of students in the for-profit Corinthian Colleges network will have their federal student loans automatically canceled, bringing an end to one of the most prominent examples of fraud in American higher education.

Anyone who entered the now-defunct school from its inception in 1995 until its demise in 2015 would have their federal student debt forgiven under the new legislation. According to the Education Department, it will wipe off $5.8 billion in debt for over 560,000 students, making it the largest single loan discharge in the agency’s history.

Thousands of former Corinthian students were already qualified for debt forgiveness, but they had to fill out paperwork and negotiate a complicated and poorly understood application procedure, according to campaigners. The assistance will now be automatic and will be extended to more debtors.

Student Loan Debt Will Be Forgiven

Officials with the Education Department indicated that those who have a deficit on their Corinthian debt would obtain refunds on payments they have previously paid. The measure, however, does not apply to debts that have already been fully paid off.

Warren and Senate Majority Leader Chuck Schumer (D-NY), who have both advocated for up to $50,000 in student loan debt forgiveness, are still urging Biden to erase that amount of debt for millions of students. Civic and social groups have joined the battle to get Biden to consider canceling a larger proportion of student debt.

According to the most recent student loan debt figures, there are 45 million student-loan debtors with a total debt of $1.7 trillion. For the great majority of student loan debtors, eliminating $50,000 in student loans would result in the cancellation of all federal student loan debt. The US Department of Education, on the other hand, has said that for 36 million student-loan debtors, $50,000 in student loan debt forgiveness would eradicate all federal student loan debt.