Loan relief for defrauded for-profit ITT Tech students
The US Department of Education said Wednesday it was wiping out student debt for thousands of borrowers who attended a for-profit college chain that made exaggerated claims about its graduates’ success in finding jobs.
The Biden administration said it approved 18,000 loan forgiveness requests from former students of the ITT Technical Institute, a chain that closed in 2016 after suffering a series of sanctions from the ITT Technical Institute. Obama administration. The new loan discharges will erase more than $ 500 million in debt.
The move marks a step forward in the Biden administration’s efforts to clear a backlog of claims in the borrower defense program, which grants loan forgiveness to students who have been defrauded by their colleges. Claims piled up during the Trump administration, which blocked the program and only started processing claims after a federal court called for it. There are now over 100,000 pending applications.
In announcing the new action, Education Secretary Miguel Cardona pledged to continue defending students deceived by their schools.
“Our action today will give thousands of borrowers a fresh start and the relief they deserve,” Cardona said in a statement. “Many of these borrowers have waited a long time for relief, and we must work quickly to make decisions for those whose claims are still outstanding.”
This follows another round of loan releases in March, when the Education Department forgave $ 1 billion in federal student debt for 72,000 borrowers. These claims were all from former for-profit college students.
Borrower advocates applauded the new approvals but called for quick relief for the thousands of other students whose applications are still pending, including many who attended ITT Tech.
“It appears the Biden administration really wants to help the people who need to be released,” said Alex Elson, vice president of Student Defense, a Washington law group. “But that makes it all the more baffling that they are so reluctant to use their authority to immediately and automatically help the countless additional borrowers who are still waiting.”
The borrower’s defense is part of several education programs targeted for overhaul by the Biden administration as it seeks to reverse the policies of the Trump era. Cardona is holding a series of hearings this month as his agency considers changes to this policy and others.
The program was rarely used until 2015, when the education department received thousands of complaints from former Corinthian college students. The for-profit college chain had recently closed after discovering it had lied to students about placement rates.
In the wake of the collapse of Corinthian and other besieged for-profit colleges, the Obama administration decided to facilitate the cancellation of student loans. But the overhaul was overturned by the Trump administration, which then wrote its own rules, making it harder to get relief. By changing the rules, then Education Secretary Betsy DeVos said it had become too easy to get forgiven loans.
Cardona began undermining DeVos’ rules in March when he repealed a formula that allowed the Education Department to only grant partial discharges of loans to students whose applications had been approved. All borrowers receiving relief will now have their loans fully discharged.
Many of ITT Tech’s 18,000 claims were approved after the education department found out the company lied about graduates’ employment prospects. The agency said ITT had made “repeated and significant misrepresentation” about its ability to help students find jobs. In fact, many students said it was more difficult to find a job when they put ITT on their resumes, the department said.
Further claims were approved after the department discovered that ITT had misled students about their ability to transfer course credits to other colleges. Credit was rarely accepted elsewhere, the department said, leaving students with “little or no progress” in their academic careers.
Borrowers will be notified of the approval of their claims in the coming weeks, the agency said.
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