They also uncovered an obscure clause in the law governing the loans: If borrowers were significantly misled by their school, they could ask the government to forgive their loans. Just as a bank appraises a house before it issues a mortgage, the Education Department is supposed to ensure that the programs it lets taxpayer-backed loans pay for are legitimate.
The Corinthian 15, backed by the Debt Collective, enlisted hundreds of students to flood the department with applications for loan relief through a program that became known as “borrower defense to repayment.” Tens of thousands of former Corinthian students eventually joined the action. In 2015, Arne Duncan, the education secretary at the time, announced that the government would wipe out their loans.
But the process dragged on, and by the time President Barack Obama left office, relatively few of the debts had been discharged. Betsy DeVos, who took over as education secretary under President Donald J. Trump, froze the program and tried to slash the relief offered to successful applicants.
Mr. Biden reversed those moves, and some 100,000 former Corinthian students have already had their loans fully forgiven. Wednesday’s action will extend the relief to hundreds of thousands more, who had not submitted borrower defense applications. And those who made payments on federally owned loans that are still outstanding will receive refunds for their past payments, Education Department officials said on Wednesday.
Student Loans: Key Things to Know
Corinthian Colleges. In its largest student loan forgiveness action ever, the Education Department said that it would wipe out $5.8 billion owed by 560,000 students who attended Corinthian Colleges, one of the nation’s biggest for-profit college chains before it collapsed in 2015.
“This has been a long time coming,” said Nathan Hornes, a member of the Corinthian 15 who attended Everest College in Ontario, Calif.
Latonya Suggs, another participant in the original strike, said she had mixed feelings about the victory. “It took way too long,” she said. “I struggled for years dealing with this.”
Tens of thousands of borrowers at dozens of different schools are still waiting for decisions on their borrower defense claims, some of which were submitted six years ago. About 200,000 applicants — including 130,000 denied in the final year of the Trump administration — are part of a class-action lawsuit seeking relief.