The Obama administration said yesterday that it would forgive federal student loans owed by Americans who can show they were lured to colleges by fraudulent recruiting, a move that potentially could involve billions of dollars and is one of the most aggressive measures yet to ease student debt, the Wall Street Journal reported today. The move is designed first of all to help former students of Corinthian Colleges Inc., a big for-profit chain that collapsed into bankruptcy reorganization this spring. Federal officials accused the company in 2014 of lying to prospective students about its graduates’ job success. Among the most egregious allegations, officials accused Corinthian-owned schools of paying temp agencies to hire its graduates for as short a time as two days so they could count as employed. Officials said that under the emerging plan, the government will consider forgiving any loans made directly by the government — those held by the majority of the 43 million Americans with student debt — so long as the borrower can document a school persuaded him or her to take out the loan under conditions that would violate state laws. The Education Department plans to use a provision of a decades-old federal law that allows borrowers to have loans discharged if they can prove their schools broke a state law — such as by using false advertising or other deception — to lure them to apply and borrow funds.
