The U.S. Department of Education announced Wednesday that 18,000 former ITT Technical Institute students who were found to be defrauded by the shuttered for-profit university will have their federal student loans cancelled in full. This move is a step in the right direction. The for-profit school closed permanently in 2016, leaving tens of thousands of students with massive student loan debt, and no degree.
More than 30,000 former students petitioned the Department of Education to cancel their debt under the “borrower defense to repayment law.” However, even after being defrauded by ITT Tech, their claims were denied by officials under the Trump administration.
Borrowers who are eligible to receive loan forgiveness will be notified over the next few weeks. The total amount to be forgiven comes to over $500 million in debt relief, covering two separate claims submitted by former ITT Tech students, including their ability to transfer credits to a new institution and their ability to obtain employment.
Officials in the Consumer Financial Protection Bureau (CFPB) and Iowa Attorney General’s Office found that between January 2007 and October 2014, ITT Tech repeatedly misled students about their ability to successfully transfer credits to other colleges. Additionally, they found that ITT Tech also lied to students about employment and earning potential following graduation between 2005 and 2016.
Of the groups of students particularly misled were military veterans. According to the Veterans Education Success organization, many veteran borrowers came to them, claiming the school lied to them. Their statements were included as evidence in the official claim made to the Department of Education.
For-profit colleges have been on the radar when it comes to student loan reform by the Executive Branch. In fact, the Obama administration had crafted a plan to grant ITT Tech students in California relief based specifically on the school’s violation of California law. This plan was detailed in a memorandum left for the next administration. However, the Trump administration, led by former education secretary, Betsy DeVos, refused to rule on applications for debt relief. This refusal only led to claims piling up before DeVos decided to grant only partial debt relief. This decision was then cancelled by the Biden Administration in March 2021, as they wished to move forward more with the Obama-era policy granting full debt relief to defrauded borrowers.
For now, the Biden administration is dealing with a large number of backlogged applications for debt relief. They are looking for ways to expedite the process, including potentially expanding the period of eligibility offered for former ITT Tech students to have their debts canceled.
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