The Biden administration’s Department of Education canceled $5.8 billion in student debt on Wednesday for former attendees of Corinthian Colleges — marking the largest single student debt cancelation ever made by the agency.
“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,” Education Secretary Miguel Cardona said in a statement.
Corinthian Colleges, a for-profit entity that filed for bankruptcy in 2015, “engaged in widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job,” the Department of Education concluded in 2015 as a result of an investigation from the department and Vice President Kamala Harris, who served as the attorney general of California at the time.
The 560,000 borrowers who attended the school from 1995 until its closure will have their loans discharged. “The action is the largest single loan discharge the Department has made in history,” the agency said.
The Department of Education emphasized that the move came as one of many actions to cancel student loans. The agency has nixed a total of $25 billion in student debt since January 2021 through loan relief.
The move also occurs as President Joe Biden weighs a broader cancellation of student debt. Last week, administration officials were leaning toward $10,000 per borrower who earns less than $150,000, according to a report from The Washington Post.
Democratic lawmakers, however, have pressured Biden to forgive up to $50,000 per borrower. Senate Majority Leader Chuck Schumer (D-NY) has argued that “all President Biden has to do is flick his pen” in order to erase the debt. However, House Speaker Nancy Pelosi (D-CA) questioned the premise that student loan forgiveness is a beneficial policy.
“Suppose,” she said in response to Schumer’s argument, “your child at this time does not want to go to college, but you’re paying taxes to forgive someone else’s obligation. You may not be happy about that.”
Meanwhile, National Association for the Advancement of Colored People (NAACP) President Derrick Johnson contended last week that Biden’s possible $10,000 plan would not be enough for black borrowers, asserting that the solution would merely be “pouring a bucket of ice water on a forest fire.”
“Black Americans are the only people who have student debt higher than their median annual income,” he said, noting that the average white family holds ten times more wealth than the typical black family. “$10,000 in cancelation would not place their student debt lower than their annual income.”
Other data show that student loan cancellation disproportionately benefits wealthy Americans. The 40% of households earning the most income hold 60% of student loan debt, according to a study from the Brookings Institution. Most people who would gain from debt cancellation make more than $74,000.
President Biden’s approval rating has dropped 18% among young Americans between the spring of 2021 and the spring of 2022, according to the most recent Harvard Youth Poll, in which 85% of respondents expressed approval of government action on student loans in some form.
The polled said that Young Democrats were 5% less likely to vote in comparison to the spring of 2018. Young Republicans, however, were 7% more likely to vote.