These colleges lied to students. Your loans don’t have to be paid back, Feds say – Fresno Bee | Vette Leader

208,000 students who used federal loans to attend ITT Technical Institute will automatically have their debt canceled, the Department of Education announced.  (AP Photo/Rich Pedroncelli, file)

208,000 students who used federal loans to attend ITT Technical Institute will automatically have their debt canceled, the Department of Education announced. (AP Photo/Rich Pedroncelli, file)


Thousands of borrowers are no longer required to pay off their student loans, federal officials say.

According to an Aug. 16 press release, the United States Department of Education will pay off any remaining student loans taken to attend the ITT Technical Institute after the school closes — their loans will be forgiven without any action on your part.

Borrowers who attended the ITT but did not graduate will also have an extended window to have their loans repaid after the school closes, the department announced.

The decision comes after an ongoing investigation by the for-profit institute, which found that “ITT made widespread and pervasive misrepresentations regarding the ability of students to get a job or transfer credit and lies about the programmatic accreditation of the associate degree from ITT has done in nursing,” the press release said.

Prior to this latest announcement, the department had already approved $1.9 billion in layoffs for 130,000 ITT students.

“ITT defrauded hundreds of thousands of students,” said Richard Cordray, director of Federal Student Aid. “By giving students the credit relief they deserve, we give them the opportunity to continue their educational journey without the unfair burden of student debt they bear from a dishonest institution.

The department also announced that DeVry University was officially notified that it owed millions after lying about its job placement rate for prospective students. The school has 20 days to respond if it decides to contest the department’s findings.

Another group of about 100 borrowers also received layoffs for loans used to enroll in the Medical Assistant or Medical Billing & Coding program at the Kaplan Career Institute’s Kenmore Square location in Massachusetts. The school, which closed in February 2013, has also increased its placement rate, according to the press release.

A step in the right direction

This is the latest round of student loans canceled by the Department of Education, many of which are aimed at helping alumni from rogue, for-profit colleges. The Biden-Harris administration has now approved nearly $32 billion in credit easing for 1.6 million borrowers, the department says.

Several industry experts welcomed the department’s decision.

Consumer Financial Protection Bureau director Rohit Chopra said in an Aug. 16 statement that he was “extremely pleased” with the department’s latest move.

“We hope ongoing oversight will prevent further abuses like those at ITT Tech, where students were exposed to high interest rates and illegal collection practices,” Chopra said. “Unfortunately, too many people have told me that college was the worst decision of their lives.”

Veterans Education Success called the decision “big news” however, urged Congress to restore GI Bill benefits to cheated veterans.

“These students deserve to have their student loans canceled after being misled about education at ITT, credit portability and post-graduation employment,” said Della Justice, vice president of legal affairs at Veterans Education Success, in an August. 16 statement.

“But it’s a total shame that veterans who have been cheated out of their GI Bill benefits aren’t getting their GI Bill back.”

However, the department’s recent layoffs are under increasing pressure as the student loan payment pause is set to expire.

Federal student loan payments have been suspended since the pandemic began. However, payments are scheduled to resume on August 31, and President Joe Biden has yet to announce whether he will extend the pause or allow it to expire.

“The targeted student loan cancellation is a small step in the right direction, but we need a lot more from @POTUS to end this crisis once and for all,” she said Student Loan Debt Crisis Center tweeted Tuesday after the department’s announcement.

This story was originally published Aug 16, 2022 1:48 p.m.

Moira Ritter reports real-time news for McClatchy. She is a graduate of Georgetown University, where she studied administration, journalism and German. She previously reported for CNN Business.

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