Loan eraser
Feds expand forgiveness to more ITT Tech students
The Education Department announced Thursday it will forgive student debt for more than 100,000 borrowers who attended colleges in the now-defunct ITT Technical Institute chain but left before graduating.
In a rarely used move, the agency said it will erase federal loans for borrowers who left the for-profit colleges during an eight-year window before their 2016 closure. During that period, the department said, ITT Tech lied about its financial health and misled students into taking on debt they couldn’t repay.
The action will offer $1.1 billion in loan forgiveness to 115,000 borrowers who attended ITT Tech, which had more than 130 campuses across 38 states. About 43% of those borrowers are in default on their student loans, the department said.
“For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school,” Education Secretary Miguel Cardona said in a statement.
Students are usually eligible for loan forgiveness if they attended a college within 120 days of its closure and were unable to complete their degrees. But for ITT Tech, the Education Department is extending the window back to March 31, 2008.
That date, the agency said, is when ITT Tech’s executives disclosed a scheme to hide the truth about the company’s finances after the loss of outside funding. It led ITT Tech to shift more costs to students, the department said, and it prevented the company from making investments to provide a quality education.
ITT Tech shut down in 2016 after being hit with a series of sanctions by the Obama administration.
Under the new action, eligible borrowers will automatically get their loans cleared if they did not attend another college within three years of the school’s closure. Those who went to another college but did not earn degrees may be eligible but must apply for discharges, the agency said.
Borrower advocates have been urging the Biden administration to broaden loan relief for students who attended shuttered for-profit colleges. The nonprofit Student Defense applauded the department’s move and said the same should be done for students who attended other for-profit chains.
“There are countless others who attended other predatory institutions who are still waiting. We hope the Department will continue to implement our recommendations to make things right for all of them, too,” Alex Elson, vice president of Student Defense, said in a statement.