The Obama administration this week announced what would appear to be good news for thousands of former students of Corinthian Colleges, the notorious for-profit company that shuttered and filed for bankruptcy in April following a long, painful collapse. The U.S. Department of Education says it will forgive the students’ federal student loans on the grounds that Corinthian defrauded them. All in all, they could be relieved of millions of dollars in debt.
The DOE’s debt-relief pledge is part of a suite of proposals aimed at relieving borrowers of any unjustified debt and cracking down on what it described as “unscrupulous colleges that deny students meaningful educational opportunities and leave taxpayers holding the bag.” Arne Duncan, the U.S. education secretary, stated that the department plans on creating mechanisms that would allow all college students who believe they were defrauded by their institutions to apply for debt relief—whether at Corinthian, whose subsidiaries included Everest and Heald, or elsewhere.
“Secretary Duncan has directed our team to ensure that students who have been defrauded by their college, or because their school closed down, receive every penny of the debt relief they are entitled to, as efficiently as easy as possible,” wrote Ted Mitchell, the U.S. under secretary of education, in a blog post announcing the news. Advocacy groups and top policymakers, including both Democrats and Republicans, applauded the announcement. They touted the federal effort to tackle the economic crisis plaguing the country’s higher-education system—including outstanding student debt nationwide totaling more than $1.2 trillion—through stronger accountability and better support for students of all backgrounds.