The Department of Education yesterday exercised its authority to extend the window to discharge student loans for individuals who attended schools that closed to cancel $1.1 billion in unpaid student loans — 43% of which are in default — for former students of ITT Technical Institute.
The window now includes any loans that were originated after March 31, 2008 — the date on which the school announced the “start of a financial scheme that kicked off a series of misrepresentations to hide the true nature of the school’s finances following a public loss of outside financing, which led to shifting additional costs to students and hindered its ability to invest in delivering quality education to students,” according to the Department.
This announcement marks the latest in a series of steps that the federal government has taken to discharge more unpaid student loans. The government had previously canceled $500 million of unpaid loans owed by students who attended ITT Technical Institute.
ITT Technical Institute was closed in 2016 as it was being investigated for using misleading data related to job placements to attract students, who were then persuaded into taking out costly student loans that they could not afford to repay once they graduated.
“For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school,” said Secretary of Education Miguel Cardona, in a statement. “Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers. At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system.”
These discharges will happen automatically as long as the individuals did not enroll at another institution within three years of ITT’s closure in 2016.
There are still 700,000 individuals who attended ITT Technical Institute and took out $3 billion in student loans that have not been dealt with, according to published reports.
“… [T]oday’s relief action left out hundreds of thousands more ITT students who were subject to the same misconduct, and the Department’s next step must be to cancel the debt for all former ITT students,” said Abby Shafroth, staff attorney with the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement
