Home Posts The Education Department Is Wiping Out Debts For For-profit College Students Who Have Been Duped.
The Education Department Is Wiping Out Debts For For-profit College Students Who Have Been Duped.
Student Debt

The Education Department Is Wiping Out Debts For For-profit College Students Who Have Been Duped.

The U.S. Education Department announced Wednesday that it is canceling student loans for thousands of borrowers who attended a for-profit college chain that made exaggerated claims about its graduates' job placement success.

The Biden administration announced that it has approved 18,000 loan forgiveness claims from former students of ITT Technical Institute, a chain that closed in 2016 following a series of sanctions imposed by the Obama administration, clearing more than $500 million in debt.

The move is 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 ordered it.

In announcing the new action, Education Secretary Miguel Cardona pledged to continue fighting for students who have been duped by their schools.

“Our action today will give thousands of borrowers a fresh start and the relief they deserve,” Cardona said in a statement, adding that “many of these borrowers have waited a long time for relief, and we must work quickly to render decisions for those whose claims are still pending.”

It comes after the Education Department cleared $1 billion in federal student debt for 72,000 borrowers in March, all of whom were former students of for-profit colleges.

Borrower advocates applauded the new approvals but demanded immediate relief for the thousands of other students whose claims are still pending, many of whom 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. “However, this belies their reluctance to use their authority to immediately and automatically help the countless additional borrowers who are still waiting.”

Borrower defense is one of several education programs targeted for reform by the Biden administration as it works to reverse Trump-era policies, and 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, a for-profit college chain that had recently been closed down after it was discovered that it lied to students about job placement rates.

Following the failure of Corinthian and other troubled for-profit colleges, the Obama administration moved to make it easier for students to get their loans forgiven. However, the overhaul was reversed by the Trump administration, which later wrote its own rules making it more difficult 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 reversed a formula that allowed the Education Department to only grant partial loan discharges to students whose claims were approved; now, all borrowers granted relief will have their loans cleared in full.

Many of ITT Tech's 18,000 claims were approved after the Education Department discovered that the company lied about graduates' job prospects. The agency stated that ITT made "repeated and significant misrepresentations" about its ability to help students find jobs. In reality, many students said it was more difficult to find employment when they listed ITT on their resumes, according to the department.

Other claims were approved after the department discovered that ITT misled students about their ability to transfer course credits to other colleges, resulting in “little to no progress” in students’ academic careers.

Borrowers will be notified in the coming weeks if their claims have been approved, according to the agency.

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