The agency said it is a rarely used move that cancels federal loans for borrowers who left commercial colleges during the eight-year window before they closed in 2016. During this period, the department said, ITT Tech lied about its financial health and misled students into taking on debts they could not pay.
The promotion will offer forgiveness on a $ 1.1 billion loan to 115,000 borrowers who attended ITT Tech, which has more than 130 campuses in 38 states. According to the department, about 43% of these borrowers do not pay back their student loans.
“For years, ITT has hidden its true financial situation from borrowers, while at the same time luring many of them to take out private loans on deceptive and unaffordable conditions, which could lead to borrowers dropping out of school,” the minister said in a statement. education of Miguel Cardona.
Students are usually eligible for loan forgiveness if they attended college within 120 days of closing and were unable to complete their degree. But for ITT Tech, the Department of Education is extending the deadline until March 31, 2008.
On that day, the agency said, ITT Tech executives uncovered a scheme to hide the truth about the company’s finances after losing outside funding. This prompted ITT Tech to shift more costs to students, the department said, and prevented the company from investing in quality education.
ITT Tech closed in 2016 after the Obama administration imposed a series of sanctions.
Under the new action, eligible borrowers will automatically repay their loans if they have not attended another college within three years of the school closing. Those who have enrolled in another college but did not complete an advanced degree may be eligible, but must apply for dismissal, the agency said.
Borrower advocates have called on the Biden administration to expand loan incentives for students who attended closed commercial colleges. The nonprofit Student Defense welcomed the department’s move and said the same should be done for students attending other commercial networks.
“There are countless others who have visited other predatory institutions who are still waiting. We hope the Department will continue to follow up on our recommendations to make things right for them too, ”said Alex Elson, vice president of student protection. …
This is the latest in a series of loans targeted at specific groups of students. In June, the Biden administration wrote off more than $ 500 million in student debt for borrowers who were defrauded by ITT Tech. This decision was based on claims that the company exaggerated the success of its graduates in finding work.
Earlier this month, Cardona announced that it would automatically forgive student loans for 300,000 Americans with severe disabilities that prevent them from earning significant income.
But the Biden administration is also facing mounting pressure to push for broader student debt write-offs. Some Democrats in Congress are calling on the White House to use executive action to strike out $ 50,000 for all student loan borrowers.
Biden suggested that such action should come from Congress, but he asked the Department of Education and Justice to study the topic. Earlier this month, Cardona said the research is still ongoing.
The Department of Education has the right to extend the loan forgiveness period in the event of school closures, but this right has rarely been exercised. Following the closure of the commercial network of Corinthian colleges in 2015, the Obama administration extended the window to June 20, 2014.
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