Much of the other debt relief measures will benefit victims of commercial college fraud, many of whom have waited years for the Education Department to review their forgiveness claims. The latter action will automatically cancel the debt of 115,000 students who left ITT Tech before completing their program after March 2008.
According to the Ministry of Education, about 43% of these borrowers currently do not default on their loans. The move came after a new review of issues at ITT Tech revealed that these borrowers were attending school at a time when the school was misleading students into taking private loans that were allegedly portrayed as grant aid and were involved in widespread misrepresentation. regarding the financial health of the institution.
“Today’s actions are a continuation of the Department’s efforts to improve and use targeted lending bodies to provide meaningful assistance to student borrowers,” Education Minister Miguel Cardona said in a statement.
“At the same time, the continuing cost of correcting violations by ITT and other predatory institutions further underscores the need for stronger and faster accountability across the entire federal financial aid system,” he added.
There are many borrowers eligible for debt relief who can still wait, according to Student Defense, a nonprofit group that defends student rights and is urging the Department of Education to speed up the process.
“Thanks to Secretary Cardona and President Biden, thousands of former ITT students are finally getting the relief they’ve been laughed at for too long. At the same time, there are countless others who have visited other predatory institutions who are still waiting, ”Vice President of Student Protection Alex Elson said in a statement.
Democrats push for broader debt cancellation
Biden, who announced during the presidential campaign that he would support the abolition of $ 10,000 on a borrower, has repeatedly resisted pressure since taking office, arguing that the government should not forgive debts to people who went to Harvard, Yale, and Penn. At this point, he has instructed Cardona to write a memorandum on the executive’s legal authorities on debt cancellation.
Borrowers’ balances have been virtually frozen for more than a year, with no federal loan payments required since March 2020. During this time, interest stopped accumulating, allowing the average borrower to save about $ 2,000 in the first year, and collection of outstanding debts was suspended.
The assistance is even more significant for those working in the public sector and may be eligible for loan forgiveness after 10 years. They still receive credit for those 10 years of mandatory payments as if they continued to pay them during the pandemic, as long as they still work full time for suitable employers.