Eda Department Approves $ 500 Million Student Debt Cancellation

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On Wednesday, the Department of Education announced it had approved the cancellation of approximately $ 500 million in federal student loans held by 18,000 borrowers who attended ITT. Borrowers will be canceled 100%.

“Our actions today will give thousands of borrowers a fresh start and the relief they deserve after ITT has lied to them on numerous occasions,” Education Minister Miguel Cardona said in a statement. “Today’s action is part of the Biden-Harris administration’s continued commitment to protect borrowers when their institutions take advantage of them. Many of these borrowers have been waiting for help for a long time, and we need to make quick decisions for those whose claims are still pending. This work also highlights the need for ongoing accountability so that institutions can never again commit this kind of widespread deception. ”

Although the Department of Education has previously approved the student loan exemption for students who have been convicted of business fraud (including ITT), the news marks the first time the Department of Education has approved a waiver on the grounds that ITT misled students about their professional prospects and about their ability to transfer loans to other schools.

ITT closed in 2016 And in September 2020, 48 state prosecutors and the Bureau of Consumer Financial Protection have ruled that PEAKS Trust, a private lending program operated by ITT Tech and affiliated with Deutsche Bank organizations, should waive collection of all outstanding education debt. The ruling led to the write-off of a private student loan of over $ 330 million for 35,000 former ITT students.

The Ministry of Education emphasizes that recent actions are part of a broader effort to provide “targeted loan assistance”. In MarchThe Biden administration announced that about 72,000 borrowers who were defrauded by their schools will receive student loan forgiveness totaling up to $ 1 billion.

Americans are currently indebted to $ 1.7 trillion into student loans. House as well as Senate Democrats have repeatedly called President Biden “broadly” forgive up to $ 50,000 in federal debt for all borrowers by order during the first 100 days in office. Such a policy would eliminate student debt by about 93% borrowers and will greatly benefit from middle and bottom wealth brackets

Biden’s first 100 days are behind and he has repeatedly repelled against his party leaders, stating that he would only support a debt relief of up to $ 10,000 and that he would prefer Congress to draft legislation.

Biden also asked the Department of Education and the Department of Justice to draw up a memorandum on using the executive to cancel student loans.

Education Department officials have confirmed to CNBC Make It that they are working to review debt cancellation options and that the department is currently seeking feedback on a variety of related topics.

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