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Biden administration drops appeal of legal decision granting former Corinthian Colleges students debt relief

7,200 former students of the defunct for-profit chain will have their federal student loans canceled.

Flags decorate a space outside an office at the Education Department headquarters in Washington. (Jacquelyn Martin/AP)

A group of 7,200 former students of the defunct for-profit chain Corinthian Colleges will have their federal student loans canceled after the Education Department agreed Thursday to drop its appeal of a court order to clear their debts.

The decision arrives more than a year after a federal judge ruled that the students in Massachusetts were entitled to a full discharge of their loans under a statute known as borrower defense to repayment. The Trump administration fought the order and brought the case to a standstill, but borrowers were hopeful the Biden administration would concede.

It took several months, but on Thursday the administration did just that.

Student loan borrowers perplexed by Biden administration’s continued defense of Trump-era lawsuits

“I really had lost hope that this day would ever come,” said Amanda Kulka, one of the borrowers in the case. “For so long this debt has been hanging over me and to finally have that burden lifted will make such a big difference in our life. I hope every person cheated by these schools gets that opportunity and that this is never allowed to happen again.”

Kulka, 33, has fought for the past six years to have the department cancel the $10,000 in debt that she amassed for a certificate in medical administration from Everest Institute, one of three schools run by Corinthian. Campus recruiters promised to find her a job in the field with hands-on career services — but that amounted to a few emails of outdated job listings from Craigslist.

An investigation by the Massachusetts Attorney General’s Office found Everest routinely lied about its programs and job placement rates. The state’s top prosecutor sued Corinthian in 2014 for allegedly using deceptive marketing to lure students into taking out loans they had no hope of paying back.

When the chain folded the following year, Massachusetts Attorney General Maura Healey filed a group claim on behalf of Everest students like Kulka. The claim featured more than 2,700 pages of supporting evidence, but the department failed to act.

In October 2019, borrowers sued then-Education Secretary Betsy DeVos and the department, which at the time claimed the attorney general’s group application was invalid. A federal judge disagreed in June 2020.

On Thursday, Healey called the department’s decision to drop the appeal a “huge victory” for students who have waited years for relief.

“Our office … stood by these students and their families from the start and hopes that today’s announcement brings some comfort and helps improve financial stability,” Healey said in a statement. “We thank the Department for complying with this court order.”

While the Biden administration has backed off the Massachusetts case, it continues to fight other Trump-era lawsuits involving federal student aid, much to the disappointment of consumer groups. Advocates are urging the administration to reconsider its position and imploring the department to speed up the processing of tens of thousands of borrower defense applications that remain in limbo.

Biden administration is whittling away at backlog of student debt relief claims

To date, Education Secretary Miguel Cardona has signed off on the cancellation of more than $1.5 billion in federal student debt for nearly 92,000 people through the borrower defense statute.

“There remain hundreds of thousands of borrowers who were also defrauded and are equally deserving of action,” said Eileen Connor, director of the Project on Predatory Student Lending, a group representing the Massachusetts borrowers. “We urge the Biden-Harris administration to move with urgency to cancel the debts of former Corinthian Colleges students across the nation who are still carrying this debt.”