The Department of Education announced yesterday that it is canceling all the remaining federal student loans for anyone who attended ITT Technical Institute between 2005 and its closure in 2016. This will result in the cancellation of loans for 208,000 individuals who collectively owed $3.9 billion on those outstanding debts.
At the same time, the Education Department announced that it has notified DeVry University that it is on the hook to pay millions of dollars for approved borrower defense to repayment discharges. DeVry can request a hearing to state its case why it should not be required to pay.
This is the second mass cancellation of debts for students who attended ITT Technical Institute. Last year, the Department canceled $1.1 billion of unpaid student loans, 43% of which were in default. The Department did not say what percentage of the additional $3.9 billion of loans that were being canceled were in default.
The decision was made without requiring individuals to file borrower defense to repayment applications because of the “widespread and pervasive misrepresentations related to the ability of students to get a job or transfer credits,” according to the Department. The Consumer Financial Protection Bureau sued ITT Tech in 2014, accusing it of pressuring students into taking out high-cost loans even though it knew most of the students would default.
“The automatic loan cancellation announced today will provide life-changing relief that has long been owed to former ITT students,” said Rohit Chopra, director of the CFPB, in a statement. “Far too many Americans are still on the hook for loans they acquired at colleges that profited from deceiving students, and the CFPB will continue to work with the Department of Education to address predatory student loan debt, to protect students, and to hold wrongdoers accountable.”
The announcement comes two weeks before a moratorium on federal student loans is set to expire and individuals are expected to resume making payments.
