U.S. Department of Education

Students who were talked into thousands of dollars in fraudulent student loans to attend Heald College in Salinas are about to experience relief, after the U.S. Department of Education announced on June 1 it will discharge all remaining federal student loans borrowed to attend the for-profit college.

The announcement covers 560,000 borrowers nationwide who will receive an estimated $5.8 billion in full loan discharges from loans to attend any campus owned or operated by Corinthian Colleges, Inc., which Heald was a part of, from Corinthian’s founding in 1995 through its closure in 2015. It’s the largest single loan discharge the department has made in its history, according to a press statement.

There is nothing that borrowers have to do at this point. The department will be contacting borrowers individually in the coming months, officials announced.

The Department of Education concluded in 2015 that Corinthian and its colleges “engaged in widespread and pervasive misrepresentations related to a borrower's employment prospects, including guarantees they would find a job,” according to a press release. “Corinthian also made pervasive misstatements to prospective students about the ability to transfer credits and falsified their public job placement rates.”

Initially borrowers who attended during a set period could apply for a “borrowers discharge.” An estimated 100,000 people were helped between 2015 and now.

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California led the way in pursuing action against Corinthian’s for-profit colleges—including Everest, WyoTech and Heald—with then-California attorney general Kamala Harris in charge of the investigation. She sued Corinthian in 2013, alleging the company intentionally misrepresented to its students about job placement rates and were engaging in deceptive advertising and recruitment. Her lawsuit triggered other inquiries in other states and by the U.S. Department of Education.

Corinthian sold most of its campuses in 2014 and closed its remaining campuses in 2015, including Heald College in Salinas, which shuttered its campus in April of that year.

"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. "For far too long, Corinthian engaged in the wholesale financial exploitation of students, misleading them into taking on more and more debt to pay for promises they would never keep. While our actions today will relieve Corinthian Colleges' victims of their burdens, the Department of Education is actively ramping up oversight to better protect today's students from tactics and make sure that for-profit institutions—and the corporations that own them—never again get away with such abuse."

In 2015, the same year Corinthian shuttered what campuses it had left, Harris released findings showing that the company misrepresented job placement rates across the country. In 2016, Harris secured a more than $1 billion judgment against the company.

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