Department of Education cancels nearly $4 billion in student loans

On Tuesday, August 16, the United States Department of Education issued a press release stating its intent to discharge all federal student loans borrowers received to attend ITT Technical Institute from January 1, 2005 through its closing in September 2016, for an amount of $3.9. billion euros in full clearances between 208,000 borrowers. It is the second largest targeted debt relief action the Biden-Harris administration has taken for defrauded borrowers, second only to the $5.8 billion loan cancellation for 560,000 former participants. of the Corinthian Colleges.

Eligible borrowers, including those who have not requested a Borrower Defense to Repayment Release, will have their debt forgiven without further action on their part. The Department of Education’s decision was made as a result of findings based on ITT’s internal policies and records; testimonials from former students, employees and administrators; ITT recruitment documents and brochures; recordings of ITT representatives interacting with prospective students; investigative records and submissions compiled by congressional investigators and state attorneys general’s offices; and individual borrower defense claims submitted by former ITT students.

Key points to remember

  • The United States Department of Education announced that it will repay $3.9 billion in federal student loans for 208,000 borrowers who attended ITT Technical Institute from January 1, 2005, to its closure in September 2016.
  • The Biden-Harris administration and the Consumer Financial Protection Bureau (CFPB) have already taken action against ITT for misleading students and pressuring borrowers to take out high-cost private loans, respectively. .
  • The Education Department has also taken action against two other for-profit institutions: DeVry University and the Kaplan Career Institute.

The Department for Education’s announcement comes ahead of its pause on student loan repayments, with interest and collections expiring at the end of the month.

ITT Federal Exam History

This is not the first time the Biden-Harris administration has taken action against ITT, which previously resulted in the approval of $1.9 billion in waivers for 130,000 students. ITT was already under scrutiny thanks to borrower defense findings that the for-profit institution misrepresented its students’ ability to get jobs or transfer credits to other schools, in addition to lie about the programmatic accreditation of ITT’s Associate of Nursing degree.

The Consumer Financial Protection Bureau (CFPB) was also working to protect ITT borrowers, resulting in the cancellation of $498 million in private student loans. The CFPB sued ITT in 2014, alleging it pressured students into taking out expensive private loans when they knew most would default. Five years later, the CFPB obtained a judgment prohibiting ITT from offering or providing student loans. The CFPB also obtained judgments against other parties who provided assistance to ITT in violation of the Consumer Financial Protection Act by holding and servicing the university’s private student loans.

In addition to the CFPB, the Department of Education received significant evidence from half of the state attorneys general’s offices across the country, led by the attorneys general of Colorado and Oregon and supported by evidence from the attorneys general of Iowa and New Mexico. His findings were also supported by significant and extensive work by Veterans Education Success.

Other institutions targeted by the Ministry of Education

Along with ITT, the Department of Education has also formally notified DeVry University that it is liable for nearly $24 million for approved Borrower Defense claims. The Department of Education found that, from 2008 to 2015, DeVry claimed that 90% of its actively job-seeking graduates found employment in their field of study within six months of graduation. of their degree, despite its actual placement rate of around 58%. The Department of Education expects the number of approved discharge amounts to increase as it continues to process additional applications from former DeVry students.

In addition, furloughs for approximately 100 Kaplan Career Institute participants have also been approved. The Massachusetts Attorney General provided evidence to the Department of Education that Kaplan reported a placement rate of over 70%, when the actual figure was as low as 25%. The Massachusetts attorney general also found that Kaplan failed to provide promised career services to borrowers.

About Judith J. George

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