The
In a rarely used move, the agency said it will erase federal loans for borrowers who left the for-profit colleges during an eight-year window before their 2016 closure. During that period, the department said, ITT Tech lied about its financial health and misled students into taking on debt they couldn’t repay.
The action will offer
“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,” Education Secretary
Students are usually eligible for loan forgiveness if they attended a college within 120 days of its closure and were unable to complete their degrees. But for ITT Tech, the
That date, the agency said, is when ITT Tech’s executives disclosed a scheme to hide the truth about the company’s finances after the loss of outside funding. It led ITT Tech to shift more costs to students, the department said, and it prevented the company from making investments to provide a quality education.
ITT Tech shut down in 2016 after being hit with a series of sanctions by the Obama administration.
Under the new action, eligible borrowers will automatically get their loans cleared if they did not attend another college within three years of the school’s closure. Those who went to another college but did not earn degrees may be eligible but must apply for discharges, the agency said.
Borrower advocates have been urging the Biden administration to broaden loan relief for students who attended shuttered for-profit colleges. The nonprofit Student Defense applauded the department’s move and said the same should be done for students who attended other for-profit chains.
“There are countless others who attended other predatory institutions who are still waiting. We hope the Department will continue to implement our recommendations to make things right for all of them, too,”
It is the latest in a series of loan discharges targeting specific groups of students. In June, the Biden administration erased more than
Earlier this month, Cardona announced he would automatically forgive student loans for 300,000 Americans with severe disabilities that leave them unable to earn significant incomes.
But the Biden administration also faces growing pressure to pursue wider student debt forgiveness. Some
Biden has suggested such action needs to come from
The
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