Loan relief granted to 18,000 former students of ITT Technical Institute

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The U.S. Education Department said Wednesday it was erasing student debt for thousands of borrowers who attended a now-defunct, for-profit college chain that made exaggerated claims about its graduates’ success in finding jobs. The chain’s company, ITT Educational Services Inc., was based in Carmel.

The Biden administration said it is approving 18,000 loan forgiveness claims from former students of ITT Technical Institute, which closed in 2016 after being dealt a series of sanctions by the Obama administration.

ITT Tech filed for bankruptcy and closed all 136 of its campuses in 2016, including those in Indianapolis, South Bend, Fort Wayne and Newburgh.

The new loan discharges will clear more than $500 million in debt.

The move marks a step forward in the Biden administration’s effort to clear a backlog of claims in the borrower defense program, which provides loan forgiveness to students who were defrauded by their colleges. Claims piled up during the Trump administration, which stalled the program and only started processing claims after a federal court demanded it. There are now more than 100,000 pending claims.

In announcing the new action, Education Secretary Miguel Cardona vowed to continue standing up for students who are deceived by their schools.

“Our action today will give thousands of borrowers a fresh start and the relief they deserve,” 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.”

It follows another round of loan discharges in March, when the Education Department cleared $1 billion in federal student debt for 72,000 borrowers. Those claims all came from former students of for-profit colleges.

Borrower advocates applauded the new approvals but called for swift relief for the thousands of other students whose claims are still pending, including many who attended ITT Tech.

“It appears the Biden administration genuinely wants to help people who are owed discharges,” said Alex Elson, vice president of Student Defense, a Washington legal group. “But that makes it all the more confounding that they are so hesitant to use their authority to immediately and automatically help the countless additional borrowers who are still waiting.”

Borrower defense is among several education programs targeted for an overhaul by the Biden administration as it works to reverse Trump-era policies. Cardona is hosting a series of hearings this month as his agency considers changes to that policy and others.

The program was rarely used until 2015, when the Education Department received thousands of claims from former students of Corinthian Colleges. The chain of for-profit colleges had recently shut down following findings that it lied to students about job placement rates.

Following the collapse of Corinthian and other beleaguered for-profit colleges, the Obama administration moved to make it easier for students to get loans erased. But the overhaul was reversed by the Trump administration, which later wrote its own rules making it tougher to get relief. In changing the rules, then-Education Secretary Betsy DeVos said it had become too easy to get loans forgiven.

Cardona began chipping away at DeVos’ rules in March when he rescinded a formula that allowed the Education Department to give only partial loan discharges to students whose claims were approved. All borrowers granted relief will now get their loans cleared in full.

Many of the 18,000 claims from ITT Tech were approved after the Education Department found that the company lied about graduates’ job prospects. The agency said ITT made “repeated and significant misrepresentations” about its ability to help students get jobs. In reality, many students said it was harder to find employment when they listed ITT on their resumes, the department said.

Other claims were approved after the department found that ITT misled students about their ability to transfer course credits to other colleges. Credits were rarely accepted elsewhere, the department said, leaving students with “little to no progress” in their academic careers.

Borrowers will be notified about their claim approvals in the coming weeks, the agency said.

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8 thoughts on “Loan relief granted to 18,000 former students of ITT Technical Institute

  1. When do people take accountability of their own actions? They lied about job placement? No one can think for themselves?

    $1B is a lot of tax dollars from hard working people that read what they were signing.

    1. Quote: The Biden administration said it is approving 18,000 loan forgiveness claims from former students of ITT Technical Institute, which closed in 2016 after being dealt a series of sanctions by the Obama administration.

      ‘Sounds like someone else made it political, David G; not me! (I.e., it was already political…isn’t free school a primary goal of the Sanders’ wing of the dumbocrats?)

      I agree with you on folks having their hands out to “the government” when they make bad decisions. Too true! Ty R. and Jaron W., below, make good points.

    1. And you decided to make it political. This has been in conversation for years, not just this year.

      American people have their hands out, especially when THEY make a poor decision.

  2. When will we ever see a headline about former ESI (ITT Tech holding company) chairman Kevin Modany going to jail for fraud, racketeering, and SEC violations?

    1. Right?! I’m shocked nobody is talking about the 1B in “other loans” forgiven by the government. I had no clue probably because I have two jobs and pay taxes on time.

  3. If they do it for one school who “took the money” and ran away on their enrolled students, they should do it for all who’s school took the money and run like Decker College of Construction and the rest on TV who deceived students into taking loans to pay those schools that left town in the middle of the night.

  4. Of course it’s political. Democrats are taking credit and blaming Trump as usual. My tax dollars are paying for those forgiveness payments. When are we going to teach people accountability for their own actions? Democrats won’t do that because it’s not politically popular.