Corinthian move seen as pivotal point in student debt forgiveness debate
President Biden’s decision to cancel billions in student debt for former Corinthian College students is raising pressure on the White House to offer more extensive relief.
The White House has signaled it is considering eliminating up to $10,000 in student loans per borrower, and the cancellation for the former Corinthian students is being seen by progressives as a pivot point.
In canceling $5 billion in debt held by 560,000 former students of the now-closed college, advocates say the administration is signaling it does have the authority to move forward on the issue without Congress.
The question, advocates say, is whether Biden has the will.
“Voters strongly support canceling student debt for people who have been defrauded by exploitative for-profit schools,” said Marcela Mulholland, political director at the liberal think tank and polling firm Data for Progress. “It’s important that we take action to cancel debt for those who were taken advantage of … and relieve them of this financial burden.”
Supporters of relief argue action could give a political boost to the White House and Democrats at a critical time before the midterm elections, but Republicans have pushed back hard on the debt relief. They say it amounts to taxpayers who have paid their own bills footing the tuition of students and have signaled they’ll work to use the issue against Biden and Democrats in the fall.
Biden and the White House have been long debating and have at times seemed near a decision.
It will come at a precarious moment for the president.
For months, Biden has suffered sagging poll numbers, and that Democrats fear will be extremely challenging to turn around by November given rising inflation and other hard-to-control economic issues. He is facing a mountain of domestic and international crises and is under pressure to deliver more results.
Angst is particularly high on the left.
After Build Back Better, Biden’s social spending bill, stalled in the Senate, progressive lawmakers tweaked their strategy to call for the president to take more executive action.
The Corinthian news, first reported by The Hill, indicated Biden is reacting to those calls.
“We are hopeful that the Biden Administration sees student debt cancellation as one of the tools to uplift struggling students, borrowers, and parents,” said Cody Hounanian, who serves as executive director at the Student Debt Crisis Center.
Hounanian called Wednesday’s announcement “long overdue and a big win” but argued more needs to be done.
“Targeted relief doesn’t go far enough,” he said. “The president has the authority to provide meaningful student debt cancellation for millions of others and he must use that power now.”
Activists have been asking for a big portion of students’ loans to be forgiven, ranging from $10,000 to five times that amount. Others are calling for total cancellation.
Some believe the Corinthian news is intended to be a lead-up to something greater.
“I’m more bullish,” said one activist and former Sen. Bernie Sanders (I-Vt.) campaign alum about Biden canceling more than $10,000, the most commonly floated figure. “I think we get higher.”
Others see Corinthian as a blueprint for future developments. For now, the group loan discharge applies to all former students who attended any Corinthian College campus since the company was founded in 1995 through its closure two decades later. By that time, it had faced multiple investigations and fraud lawsuits.
Braxton Brewington, spokesperson for the Debt Collective, said that the Biden administration can learn from the mistake of delaying relief for Corinthian students.
“Now we see that unilateral cancellation was the most sensible and just solution all along, and the same is true for broad-based relief,” Brewington said. “Biden’s next step must be to immediately eliminate all federal student debt for all borrowers. Means-testing student debt cancellation isn’t just administratively impractical, it’s simply not what racial and economic justice demands.”
The situation is particularly unique because of Vice President Harris’s long history with the college.
As attorney general of California, her office won a more than $1 billion judgment against Corinthian for its “predatory and unlawful practices.” Several years prior, she filed suits alleging that Corinthian intentionally misrepresented information to students about job placement rates and was engaging in deceptive and false advertising and recruitment.
During a speech at the Education Department, Harris detailed her experience successfully suing Corinthian for targeting vulnerable people through deceptive advertising and marketing campaigns. She described the decision as a long time coming.
“In 2016, after we obtained the judgment against Corinthian, I said then that the least we could do was to give everyone Corinthian took advantage of the relief they deserve,” Harris said. “Finally, and sadly it has taken this long, finally that promise is fulfilled.”
This announcement is the second so-called group discharge from Biden’s Education Department. In April, it approved $238 million in discharges for students who attended Marinello Schools of Beauty, another for-profit higher education network.
So far, the administration has offered $25 billion in loan relief since January 2021. The White House maintains it has done a lot for borrowers, including extending a pandemic-related moratorium that has lasted throughout Biden’s first term in office.
While many on the left contend the goal for forgiveness is not simply political — they see it as an economic and racial justice issue — they also hope it will help their party and are trying to convince other Democrats skeptical it is a win-win.
“This can build momentum for a broad-scale cancellation,” said Mulholland.