On June 1, 2022, the Department of Education announced that it would cancel all of the federal student loans former Corinthian College students borrowed to attend those schools (Heald College, Everest Institute/College, and WyoTech) from Corinthian’s founding in 1995 through its closure in 2015. The cancellation is based on Corinthian’s widespread and pervasive fraud, including lies used to convince people to enroll and take out student loans. As Secretary of Education Miguel Cardona said, “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.” This action is meant to finally provide justice and redress to Corinthian borrowers.
As a result of today’s action, 560,000 student loan borrowers–including approximately 200,000 in default – will have their federal student loans canceled without needing to file an application for relief. This is the largest borrower defense cancellation action the Department of Education has ever taken. All people with outstanding federal student loans for Corinthian should receive the discharge – including borrowers with Direct Loans, commercially-held FFEL loans, and Parent PLUS loans. And, importantly, the discharges will be automatic – the Department has wisely recognized that Corinthian borrowers should get relief without having to jump through any hoops.
In addition to canceling outstanding loans, the Department also announced that it will delete adverse credit history associated with Corinthian loans, and that borrowers whose defaulted Corinthian loans rendered them ineligible for further federal student aid will have their eligibility restored. This will make it easier for former Corinthian students to go back to school and get another shot at education. Additionally, the Department announced that some Corinthian borrowers will receive refunds: borrowers who made payments on Direct loans or Department-held FFEL loans and who still have balances on their Corinthian loans will both have their balances discharged and receive refunds of amounts previously paid. The Department has said that it will take time for borrowers to receive notices and see the debt canceled from their accounts, and likely more time for refunds to be issued, but that the process of notifying borrowers should begin in the coming weeks.
Borrower Tip: The Department has said all of this relief will be automatic, meaning borrowers will not need to do anything to receive it. But, since some people may be entitled to refunds, borrowers should consider contacting their loan servicer to make sure their current address and contact information is on file for any mailed refund checks.
We know that this relief will change many borrowers’ lives. Many people have been waiting years if not decades for the Department of Education to cancel the debts associated with these exploitative schools. In the meantime, we know that most Corinthian borrowers have struggled–through no fault of their own–to repay their Corinthian loans, and that many have experienced default and suffered seizures of their tax refunds and social security benefits, garnishment of their wages, and damaged credit as a result.
We would love to hear from you about what this loan cancellation will mean in your life. Please share your story with us here.
If you attended a different school and are curious about how to apply for borrower defense cancellation, there are resources for you, including:
- Our primer on borrower defense
- Our summary of the Department of Education borrower defense findings (these findings outline misconduct that the Department has found particular programs at particular schools have engaged in, and the Department of Education will grant borrower defense applications from people who attended these programs and experienced this misconduct) and other group discharges.
- A guide to submitting an individual application created by the New York Legal Assistance Group
- The Department of Education’s website for submitting a borrower defense claim.
