The U.S. Department of Education announced the cancellation of $1.1 billion in student debt, for 115,000 borrowers. The decision helps students of the now-defunct ITT Technical Institute, a for-profit university that ceased all operations in September 2016. The borrowers who will no longer have to pay did not finish their degrees or left ITT in March 2008. The Education Department estimates that 43% of these borrowers are in default.
The decision followed a new review on the problems that ultimately sunk ITT. At the time these borrowers attended the school, the administration there “engaged in widespread misrepresentations about the true state of its financial health and misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid,” the Education Department noted. ITT’s wrongdoing meant the school spent more money to stay in business than educating students enrolled there. The university kept its financial problems a secret from borrowers as it pressured them to take costly private loans with “misleading and unaffordable terms” that may have influenced some students to leave the school, Education Secretary Michael Cardona said.
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“Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers,” Cardona said in a statement Thursday. “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.”
Thursday’s announcement came a week after Cordova announced on Aug. 19 that over 323,000 federal student loan borrowers would have their debt canceled, erasing over $5.8 billion in debt. The borrowers eligible are those with significant disabilities as part of an effort to fix a debt program meant to help those with disabilities. As NPR found, some students were not getting the debt relief they are eligible for under the Total and Permanent Disability Discharges Program. Some borrowers did not even know they were eligible. The affected borrowers will be identified through data from the Social Security Administration.
Since President Joe Biden took office in January, the Education Department has approved the cancellation of over $9.5 billion in debt, affecting over 563,000 borrowers. Congressional Democrats have pushed Biden to take more drastic action to cancel $50,000 per borrower student debt during the coronavirus pandemic, reports CNBC. Biden ordered the Education and Justice Departments to see if he does have legal authority to do so with an executive order, but the results of that review have not been revealed.
