The Department of Education will forgive the federal loans of thousands of students who attended Corinthian Colleges, Secretary of Education Arne Duncan announced Monday.
Corinthian, a large for-profit education company, last month filed for bankruptcy amid multiple charges of fraud.
Duncan explained the move as an attempt to counter "the ethics of payday lending," according to the New York Times.
But the announcement is proving divisive, with critics citing the potentially huge taxpayer burden — the cost to the government could amount to as much as $3.5 billion if every former Corinthian student applies for relief.
Supporters, on the other hand, are hailing the move as a compassionate stance for students in unexpected need.
The New York Times reports:
“A lot of men and women have been hurt by this unfortunate situation, including low-income and minority students,” said a joint statement from Representative John Kline, the Minnesota Republican who is head of the Education and Workforce Committee, and Representative Robert C. Scott, Democrat of Virginia, the ranking minority member.
“Helping those eligible students who have been harmed is the right thing to do,” the statement said.
Mr. Duncan also said the department planned to develop a process to allow any student — whether from Corinthian or elsewhere — to be forgiven their loans if they had been defrauded by their colleges.
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