The Biden administration plans to cancel all outstanding student loans for those who attended Corinthian Colleges, formerly one of the largest for-profit education companies, the U.S. Department of Education announced on Wednesday.
The schools have been accused of predatory and unlawful practices, and faced lawsuits from the Consumer Financial Protection Bureau as well as Vice President Kamala Harris when she was attorney general of California. The company filed for Chapter 11 bankruptcy in 2015.
Around 560,000 borrowers stand to benefit from the debt cancellation, which will come out to around $5.8 billion. That’s the largest single debt forgiveness action taken by the government to date.
“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,” U.S. Secretary of Education Miguel Cardona said in a statement.
Corinthian was founded in 1995, and by 2010, it had enrolled more than 100,000 students across 100 campuses.
More from Personal Finance:
What new graduates need to know about money and jobs
These bachelor’s degrees from public colleges pay more than $100,000
25% of Americans are delaying retirement due to inflation
Former students of the colleges who still have a student loan balance should be refunded for previous payments made on their debt, senior administration officials said on Wednesday.
The relief should be automatic, they added, meaning borrowers won’t need to navigate any paperwork or apply. Qualifying borrowers are expected to be notified within weeks.
“Many borrowers have been waiting for years and years for their applications to be processed,” said higher education expert Mark Kantrowitz. “They’ll no longer be waiting in limbo.”
To date, the Biden administration has approved $25 billion in loan forgiveness for 1.3 million borrowers.
The news comes as the White House is mulling whether to move ahead with broad based student loan forgiveness. Most recently, officials were leaning toward wiping out $10,000 for all borrowers who earn below $150,000, but a spokesperson for the administration said they’ve haven’t come to any decision yet.