St. Louis Post-Dispatch
Despite pressure from the far-left fringe of the Democratic Party, President Joe Biden is rightly slowing down proposals to provide relief to college graduates mired in student loan debt. But a loan cancellation decision he made recently was right: giving full relief to the 560,000 students defrauded by for-profit Corinthian University.
Students who have been ripped off by the Corinthian Degree Factory deserve to have their grievances handled separately from others who knowingly went into debt and got a legitimate college education in return. Someone who is scammed by buying a junk car with no engine is not equivalent to someone who buys a new car on credit and then realizes that the monthly payments are too high for the income the buyer is earning.
The $5.8 billion pardon program for former Corinthian students recognizes that the university has fabricated performance records, including placement rates. Corinthian greatly oversold the value of its degree. Approximately 560,000 students took out federally guaranteed loans between 1995 and 2015. Corinthian once had 105 campuses and had a peak enrollment of 110,000 students.
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The scam ended after then-California Attorney General Kamala Harris filed a lawsuit in 2013. Now students will be able to get all outstanding debts to Corinthian forgiven, but they must always seek repayment of debt already paid if they believe they have been defrauded.
Inspired in part by the apparent success of Corinthian, then-businessman Donald Trump set up his own for-profit university, which also ended up in court in 2013. After five years of litigation in which the New York attorney general called the company a “fraudulent Donald Trump university,” a federal judge ordered Trump to pay $25 million to former students.
However, the jury is still out on other students who attended legitimate institutions and simply overborrowed. As a candidate, Biden proposed canceling $10,000 in federal debt per student for borrowers earning up to $125,000 a year. It was a big request of $325 billion. Many graduates who paid their debts in full from decades past were justified in wondering why today’s debtors deserve special treatment, especially in a time when employers are crying out for help and salary scales are soaring. .
That argument comes up against the hard mathematical truth: More than 40 million Americans are struggling with student loan obligations, with the bill reaching $1.7 trillion nationwide. The burden of student debt is hitting black borrowers the hardest, the NAACP claims, saying a $10,000 rebate equals a lukewarm “slap in the face.” Some progressives are asking for a $50,000 pardon.
Regardless of the outcome, the administration would be wise to require all recipients of debt relief to complete a specific financial literacy training program — a good idea for Americans in general — so that they can learn budgeting, financial self-sufficiency, and ensure that any debt charges stay within realistic projections of future income.