Biden administration cancels $3.9 billion in federal loan debt for former ITT Technical Institute students

On Tuesday, the Biden administration announced that borrowers with federal student loans for ITT Technical Institute will have their loans forgiven. The Education Department stated that the college misrepresented the value of its programs, the Associated Press reported.

The former students are protected under the federal borrower defense rule, established to protect against false advertising and fraud.

All ITT Technical Institute students as far back as January 2005 will have their federal student loan debt canceled. This loan forgiveness impacts 208,000 borrowers and passes the $3.9 billion bill to taxpayers.

Education Secretary Miguel Cardona stated, “The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs to profit off federal student loan programs, with no regard for the hardship this would cause.”

The Education Department accused the school of using high-pressure tactics to enroll students. As a result, the Department ruled that ITT Tech could no longer enroll students using federal loans. The ruling forced the college to close its 130 campuses across the U.S. in 2016.

The news outlet reported that investigators discovered evidence that the school misled students to believe it would be easy to get a job with a degree from their institute. They also stated that the college lied to students about the ability to transfer credits to another school.

Previously, the Education Department canceled $1.9 billion in federal loan debt for ITT Tech students who applied for relief. With the new broad cancellation announcement, borrowers will not be required to apply to have their debt forgiven.

Chief of Federal Student Aid Richard Cordray accused the college of defrauding “hundreds of thousands of students.” He said, “By delivering the loan relief students deserve, we are giving them the opportunity to resume their educational journey without the unfair burden of student debt they are carrying from a dishonest institution.”

So far, the Biden administration has canceled $32 billion of student loan debt for 1.6 million borrowers – and that number keeps climbing. In May, the president announced plans to forgive up to $10,000 per student loan borrower. An official decision has not been reached for general federal student loan forgiveness. An announcement is expected by the end of the month.

Since March 2020, 26.78 million borrowers have not been required to make payments on their loans. The forbearance period is set to expire on August 31.