Education Department Approves More Loan Forgiveness for Defrauded Student Borrowers
The Education Department approved 18,000 claims for federal student loan forgiveness Wednesday – totaling roughly $500 million in relief – for students who attended the now defunct for-profit ITT Technical Institute.
The new batch of relief for borrowers, who filed years ago for loan forgiveness through what's known as borrower defense, is the latest effort by the Biden administration to help individuals who enrolled in for-profit colleges that made false claims about the value of their certificates and degrees. The efforts represent an about-face from the Trump administration, which sought to limit the number of borrowers who qualified for loan forgiveness through borrower defense, as well as limit the amount of relief those who did qualify received.
Wednesday's announcement brings total loan cancellation through the borrower defense process by the Biden administration to $1.5 billion for approximately 90,000 borrowers.
"Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them," Education Secretary Miguel Cardona said in a statement. "Many of these borrowers have waited a long time for relief, and we need to work swiftly to render decisions for those whose claims are still pending."
The announcement provides relief for two groups of borrowers – one based on false claims related to employment prospects and the second on false claims related to the ability to transfer credits.
Education Department documents show that ITT Tech made "repeated and significant misrepresentations" to students related to how much they could expect to earn and the jobs they could obtain after graduation between 2005 and the institution's closure in 2016.
"In reality, borrowers repeatedly stated that including ITT attendance on resumes made it harder for them to find employment, and their job prospects were not improved by attending ITT," the documents state.
Department documents also show that ITT misled students about the ability to transfer their credits to other institutions from January 2007 through October 2014, finding that the credits rarely transferred and that "borrowers made little to no progress along their educational journey, yet were saddled with student loan debt as a result of their time at ITT."
"This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again," Cardona said.
The Education Department underscored that their ability to provide the relief is in large part due to evidence provided by the Consumer Financial Protection Bureau, the Iowa Office of the Attorney General and Veterans Education Success, all of which have been advocating on behalf of former ITT Tech students for the better part of a decade.
"So many veterans came to us about how ITT Tech cheated them and stole their GI Bill," Carrie Wofford, president of Veterans Education Success, said in a statement. "Their courage – and that of several key whistleblowers – enabled us to provide the Education Department the evidence it needed to deliver long-awaited justice to these brave students."
Advocates for student loan borrowers duped into enrolling in for-profit colleges cheered the announcement but warned that hundreds of thousands of additional borrowers deserve their loans discharged as well.
"The Department needs to address the more than 700,000 borrowers with over $3 billion in fraudulent debt from ITT," said Eileen Connor, legal director of the Project on Predatory Student Lending, which has represented more than one million former for-profit college students.
"We cannot ask these borrowers to wait another day or pay another dollar toward federal student loans that never should have been made in the first place," she said, noting that the bankruptcy court has legally recognized that all 700,000 students were scammed by the former for-profit conglomerate and that outstanding balances to ITT have been cancelled along with any private loans that its recruiters steered them to.
The Project on Predatory Student Lending represents 170,000 borrowers in a lawsuit filed against the Education Department, Sweet v Cardona, over borrower defense applications that have been stalled for years.
Under Cardona, the Education Department has moved quickly to correct course from the previous administration.
In March, the Education Department approved $1 billion in student loan relief to 72,000 borrowers with previously approved borrower defense claims. The department also suspended requests for earnings documentation from borrowers whose student loans had been discharged after they became permanently disability, which reinstated discharges for roughly 41,000 borrowers.
The Education Department is also set to begin the rulemaking process to overhaul the process of borrower defense, total and permanent disability discharges and other issues related to for-profit colleges, starting with a three-day public hearing next week.