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Loan relief granted to defrauded commercial college students

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(AP) – The US Department of Education said Wednesday it is writing off student debt from thousands of borrowers who have attended a network of commercial colleges who have exaggerated their alumni’s job search success.

The Biden administration has said it is approving 18,000 loan forgiveness applications from former students of the ITT Institute of Technology, a network that closed in 2016 after the Obama administration passed a series of sanctions. Payments on the new loan will help pay off more than $ 500 million in debt.

The move marks a step forward in the Biden administration’s efforts to tackle backlog of claims through a borrower protection program that forgives loans to students who have been defrauded by their colleges. Lawsuits piled up during the Trump administration, which stalled the program and only started processing claims after a federal court demanded it. More than 100,000 claims are currently pending.

In announcing the new action, Education Minister Miguel Cardona pledged to continue to protect students deceived by their schools.

“Our actions today will give thousands of borrowers a fresh start and the relief they deserve,” Cardona said in a statement. “Many of these borrowers have been waiting for help for a long time, and we need to act quickly to make decisions for those whose claims are still pending.”

This follows another round of loan repayments in March, when the Department of Education paid off $ 1 billion in federal student debt for 72,000 borrowers. All of these claims came from former commercial college students.

Borrower protection is one of several educational programs the Biden administration intends to revise as it seeks to change Trump-era policy. Cardona will hold a series of hearings this month as his agency considers changes to this and other policies.

The program was rarely used until 2015, when the Department of Education received thousands of applications from former Corinthian college students. A network of for-profit colleges was recently shut down after it was revealed that they lied to students about their employment rates.

Following the collapse of Corinth and other besieged commercial colleges, the Obama administration took steps to make it easier for students to obtain loans. But the overhaul was canceled by the Trump administration, which later wrote its own rules that made it harder to get aid. Changing the rules, then-Secretary of Education Betsy DeVos said it had become too easy to get forgiven for loans.

Cardona began waiving DeVos’ rules in March when he canceled a formula that allowed the Department of Education to issue only partial loan payments to students whose claims were approved. Now all borrowers who received assistance will be fully repaid.

Many of ITT Tech’s 18,000 lawsuits were approved after the Department of Education discovered that the company had lied about graduate employment prospects. The agency said ITT has “repeatedly and materially misrepresented” its ability to help students get jobs. In fact, many students said it was harder to find work when they listed ITT on their resumes, the department said.

Other claims were approved after the department found that ITT had misled students about their ability to transfer course credits to other colleges. Loans were rarely accepted elsewhere, the department said, with the result that students “made little progress” in their academic careers.

The agency said borrowers will be notified of the approval of their claims in the coming weeks.

Copyright 2021 Associated Press. All rights reserved.

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