(HUFFING TON POST) Shaken Nasiripour, December 7, 2015 — he U.S. Department of Education will cancel $27.8 million in federal student loans owed by some 1,300 former students of defunct for-profit school chain Corinthian Colleges Inc. after determining that the students were swindled into taking on the debt, according to a government report released Thursday.
The move marks the first recent use of a little-utilized provision in federal law that gives student debtors the right to petition the Education Department to discharge their debt in cases where they were defrauded into taking out loans.
The debt forgiveness plan only affects 1 percent of the roughly 125,000 student debtors who are eligible for expedited debt cancellation. That comes to about 2 percent of the students’ nearly $1.3 billion in combined loan balances. The department said in June and November that those borrowers were eligible for immediate loan relief after determining that Corinthian had likely defrauded the former students by advertising false job placement rates.
Affected borrowers will begin to learn on Friday about the Obama administration’s move to cancel their debts, the department said.