The Biden administration’s Department of Education cancelled a whopping $5.8 billion in student debt on Wednesday for former attendees of Corinthian Colleges. The move is the largest student debt cancellation in history by the agency.
Education Secretary Miguel Cardona said in a statement, “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.”
Corinthian Colleges, a large for-profit post-secondary education company, filed for bankruptcy in 2015 after engaging in “widespread and pervasive misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job.”
Up to 560,000 borrowers who attended the school from 1995 until the school's closure will have their loans annulled, making the action one of the largest single loan discharges in the Department's history.
The Department of Education has cut a total of $25 billion in student debt since January 2021 through loan relief.
Biden administration officials last week were leaning toward broader cancellations of student debt, suggesting a $10,000 loan relief package per borrow who earns under $150,000, according to a report from The Washington Post.
Despite the generous $10,000 relief, Democrat lawmakers have pressured Biden to up the figure to $50,000 per borrower, with Democrat Senate Majority Leader Chuck Schumer arguing that “all President Biden has to do is flick his pen” to erase the debt.
However, House Speaker Nancy Pelosi questioned if student loan forgiveness is a beneficial policy, responding to Schumer’s argument by saying, “Suppose 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,” the Daily Wire reported.
National Association for the Advancement of Colored People (NAACP) President Derrick Johnson also weighed in on the $10,000 loan relief, saying that the amount would not be enough for black borrowers, saying the solution is like “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 how white families typically hold more wealth than black families. “$10,000 in cancelation would not place their student debt lower than their annual income.”
The Daily Wire reports:
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 poll 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.