Biden admin announces cancelling nearly $6 billion in loan debt for students of defunct college chain
In the first indication that President Joe Biden could be preparing to cancel student loan debt, the administration is prepared to wipe out nearly $6 billion owed by hundreds of thousands who attended a for-profit college chain, a possible trial balloon for the wider loan forgiveness that Democrats have been clamoring for.
On Wednesday, around 560,000 borrowers who racked up debt while attending the now-defunct Corinthian Colleges got the good news that their debt is being erased, the largest single such loan discharge in the history of the U.S. Department of Education although former Corinthian students who have honored their obligations and paid off their loans will not receive refunds.
“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 in a statement. “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. 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.”
Corinthian Colleges filed bankruptcy in 2015 after widespread findings of fraudulent practices including providing false data about the success that students had in finding jobs in their fields of study after graduation; it closed its doors after being hit with a $30 million fine from the Department of Education.
The move is unlikely to satisfy congressional Democrats who, facing an electoral bloodbath in the midterm elections, have been demanding that Biden cancel $50,000 in student debt. He is reportedly leaning toward nullifying $10,000 per borrower for those making less than $150,000 per year.
Rep. Alexandria Ocasio-Cortez, the intellectual driving force of the dominant progressive wing of the Democratic Party was dismissive of the lower number.
“$10k means tested forgiveness is just enough to anger the people against it *and* the people who need forgiveness the most,” the socialist diva tweeted last week. “$10k relieves most the people who owe the least. What relief is there for the most desperate? For them, interest will undo that 10k fast. We can do better.”
The Washington Post Editorial Board criticized Biden’s $10,000 debt forgiveness measure, saying “the president’s apparent plan would still be an expensive and inequitable election-year stunt.”
“These provisions, while welcome, would not stop the policy from becoming yet another taxpayer-funded subsidy for the upper middle class. The president’s means test would be almost useless, as some 97 percent of borrowers would still qualify for forgiveness,” WaPo added.
Activists and desperate Democrats are begging for Biden to “do something” on student loans to stave off an extinction-level event in the midterms, but $10,000 of forgiveness is unlikely to impress the upper-class professional leftists whose debt far exceeds the meager number and passing the buck to taxpayers will only further contribute to the sour mood among many voters who either did not take out loans or paid them back.
Vice President Kamala Harris, who as California’s attorney general sued Santa Ana-based Corinthian, is expected to make the formal announcement on Thursday.
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