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If you took out student loans to attend a Corinthian Colleges institution, you can now have your remaining federal student loan debt fully forgiven.
The U.S. Department of Education announced on June 1, 2022 that it will discharge $5.8 billion in federal student loan debt for 560,000 borrowers who took out their loans to attend the now-defunct institution.
Here’s what to know about this latest debt-relief action from the federal government, what to do if you think you qualify for it, and your options if you don’t.
- Whose loans were canceled and why?
- What this means for federal student loan borrowers
- Student loan relief to date
- How to get federal student loan forgiveness
- Forgiveness alternatives if you’re struggling to pay your student loans
Whose loans were canceled and why?
The Department of Education says it will cancel federal student loan balances for borrowers who:
- Attended one of Corinthian’s 105 campuses between 1995, when the school opened, and 2015, when it closed.
- Took out their federal loans to attend a Corinthian College.
- Have applied for discharge through borrower defense.
- Have not yet applied for discharge through borrower defense.
The cancellation comes after years of investigations by the Department of Education and the California Attorney General’s office. Those investigations concluded Corinthian defrauded borrowers by misrepresenting the college’s job placement rates, job prospects for Corinthian graduates, and transferability of credits.
What this means for federal student loan borrowers
If you didn’t attend Corinthian College, or attended but didn’t use federal student loans to pay for your time there, the Department of Education’s latest move won’t directly affect you.
But conversations about broad student loan forgiveness continue at the highest levels of the federal government. The Washington Post has reported that the White House plans to cancel $10,000 in federal student loan debt for individual borrowers with incomes under $150,000 ($300,000 for married couples).
Meanwhile, the student loan payment pause continues until Aug. 31, 2022 — unless the government extends it again.
Check out: Coronavirus Relief for Federal Student Loan Borrowers in Place Through Aug. 31, 2022
Student loan relief to date
The government first paused payments on federal student loans, and set the interest rate on those loans to zero, during the pandemic. Officials have extended the pause multiple times, but as of now payments are set to resume on Sept. 1.
Additionally, the Department of Education has taken steps that add up to $25 billion in loan relief for 1.3 million borrowers, including those benefitted by the Corinthian Colleges loan forgiveness. The Department has:
- Cleared the path for 690,000 borrowers to obtain borrower defense and school closure discharges totalling $7.9 billion.
- Made changes to the Public Service Loan Forgiveness program that allowed 113,000 to qualify for $6.8 billion in loan forgiveness.
- Discharged more than $8.5 million for more than 400,000 borrowers with total and permanent disabilities.
How to get federal student loan forgiveness
The federal government provides student loan borrowers with multiple ways to get their debt wiped clean, including:
Public Service Loan Forgiveness
Under this program, you can have remaining Direct loan balances forgiven if you…
- Work full-time for a government or qualifying non-profit organization
- Make 120 qualifying monthly payments under an income-driven repayment plan
Learn more: Public Service Loan Forgiveness
Teacher Loan Forgiveness
Under this program, you can have up to $17,500 of Direct or FFEL loans forgiven if you …
- Teach full-time for five complete and consecutive academic years
- Teach those years in a low-income school or educational service agency
Learn more: Student Loan Forgiveness for Teachers
Additionally, you may have your Direct, FFEL or Perkins loans discharged if you …
- Were enrolled in a school when it closed, or it closed soon after you withdrew
- Took out a loan to attend a school and the school acted inappropriately regarding your loan or the educational services the loan paid for
- Become totally and permanently disabled
- Pass away
Forgiveness alternatives if you’re struggling to pay your student loans
If you don’t qualify for federal student loan forgiveness or discharge and are struggling to pay your student loans, you have other options, including:
Income-driven repayment plans
Under these payment plans, offered by the Department of Education for federal student loan borrowers, your income and family size determine your monthly loan payment amount. Four options are available:
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
Learn more: Income-Driven Repayment: Which Plan Should You Choose?
Direct Consolidation Loan
If you have multiple federal student loans and find it hard to keep track of them, you can roll them into a Direct Consolidation Loan. Consolidation can also lower your monthly payment amount by extending your repayment period — up to 30 years.
While these federal student loans will streamline your payments, they won’t necessarily give you a lower interest rate. Your rate for a Direct Consolidation loan will be the weighted average of the interest rates on all the loans you’re consolidating.
Learn more: What Is a Direct Consolidation Loan?
Student loan refinance
Refinancing student loans can be a way to get a lower interest rate and a lower monthly payment, especially if your credit has improved since you first took out your student loans. It’s possible to refinance both federal and private student loans into a single loan.
If you’re considering refinancing your student loans, we can help you get started. Credible makes it easy to compare student loan rates from multiple lenders without affecting your credit. Use our calculator below to get an idea of how much refinancing might save you.
Step 1. Enter your loan balance
Step 2. Enter current loan information
Step 3. Enter your new loan information to start calculating your savings
If you refinance your student loan at % interest rate, you can save will pay an additional $ monthly and pay off your loan by . The total cost of the new loan will be $.
Does refinancing make sense for you?
Compare offers from top refinancing lenders to determine your actual savings.
Checking rates won’t affect your credit score.