Attorney General Becerra: Students Begin to Receive Loan Forgiveness After Being Defrauded by Corinthian and Other Predatory For-Profit Colleges
SACRAMENTO – Attorney General Xavier Becerra today issued a statement following U.S. Secretary of Education Miguel Cardona’s announcement today that the U.S. Department of Education (ED) will cancel student loan debt for approximately 72,000 student borrowers who were defrauded by predatory for-profit colleges, including the now-defunct, massively predatory Corinthian Colleges and ITT Technical Institute.
"We applaud the Biden Administration’s Department of Education for providing an additional $1 billion in student loan debt relief to borrowers who were defrauded by Corinthian Colleges and other predatory for-profit colleges across the nation,” said Attorney General Becerra. “This is an important first step that builds on the work our office conducted with the Obama Administration and the legal challenges that we brought to oppose the Trump administration's callous denial of debt relief. This vital work continues, however, as many students still await relief after falling prey to these same crooked tactics by dishonest for-profit colleges."
In 2013, the California Attorney General’s Office filed a lawsuit against Corinthian to end the for-profit college’s abusive practices. As a result of this and other regulatory actions, Corinthian permanently closed all of its schools in California in April 2015 and filed for bankruptcy the following month. In June 2015, ED made findings—based on a joint investigation with the California Attorney General’s Office—that former students who relied on Corinthian’s falsified job placement rates had a valid “borrower defense” claim entitling them to full relief from their federal student loans. However, with the change in administrations from President Obama to President Trump, ED and Education Secretary Betsy DeVos reneged on this promise and refused to honor their obligations to provide loan forgiveness. In December 2017, Attorney General Becerra sued the Trump Administration over this failure, seeking to ensure that defrauded Corinthian borrowers received the full relief that they were promised.
Today's announcement is an important first step in making good on the promises that ED made to defrauded borrowers nearly five years ago. ED’s announcement applies to the cohort of student borrowers with approved relief claims, which includes tens of thousands of students that attended Corinthian and ITT. Many more borrowers should still be eligible for loan forgiveness because they have pending claims with ED or were rejected under the Trump administration.