Largest Single Student Debt Cancellation in Department of Education History

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On Wednesday, the Biden Administration’s Department of Education canceled the largest student debt sum to date – $5.8 billion for former Corinthians College attendees.

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.

The Corinthian College, a for-profit entity, filed bankruptcy in 2015 after the Department of Education found they had engaged in “misrepresentations related to a borrower’s employment prospects, including guarantees they would find a job.”

According to the report, the $5.8 billion will cancel loans of 560,000 students who attended from 1995 until its closure.

The Biden-Harris Administration has canceled $25 billion in student debt since January 2021 through cancelling loans. The president has moved toward more student debt relief in recent weeks. Last week the Washington Post reported that the administration’s leaning toward the cancelation of $10,000 for those who earn less than $150,000, as Biden has repeatedly suggested he would consider.

Democratic lawmakers have pressured the president to eradicate $50,000 per borrower. Sen. Chuck Schumer (D-NY) has contended that by the “flick of his pen,” the president can wipe out the debt. However, House Speaker Nancy Pelosi questioned Schumer’s argument. Pelosi pointed out, “If 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.”

According to Derrick Johnson, president of the National Association for the Advancement of Colored People (NAACP), “Black Americans are the only people who have student debt higher than their median annual income,” Johnson argued that the “average white family holds ten times more wealth than the typical black family.” He added that the $10,000 was a “bucket of ice water on a forest fire.”

However, other sources point toward America’s wealthiest holding the payload of student debt. Forbes Magazine dives beneath the surface of a Brookings report to compare apples to apples. Preston Cooper, a Forbes contributor, pinpointed the student debt forgiveness argument. It would benefit the poorest households. But as Looney notes, this is like “assessing a homeowner’s wealth by counting their mortgage balance but not the value of their home.”

Bernard Goldberg’s recent opinion article on The Hill.com mocked Biden and the Democrats for their plans. He pointed to America’s wealthiest households grappling with significant student loans. Those who attended graduate school to become doctors and lawyers had the highest debt. Goldberg said, “So, forgiving debt would help them more than it would help the less-well-off borrowers about whom Joe Biden supposedly cares so much.”