The Department of Education announced Tuesday that it will pay off all remaining federal student loan debt for students who attended former for-profit school ITT Technical Institute, saving nearly $3.9 billion for about 208,000 people.
Eligible borrowers will automatically have their loans paid off if they attended ITT Tech from Jan. 1, 2005 until it closes in September 2016, the department said in a press release.
The institution, which was one of the largest for-profit college chains in the United States at its peak, has been accused of misleading students about its academic programs and aggressively forcing students into risky loans. In 2016, following a series of state and federal investigations and Department of Education sanctions, the school filed for bankruptcy and abruptly closed all of its campuses across the country.
“It’s time student borrowers stopped shouldering the burden of ITT’s years of lies and false promises,” Cardona said in a statement Tuesday.
“The evidence shows that for years ITT has deliberately misled students about the quality of their programs in order to benefit from government student loan programs, regardless of the hardship this would cause,” continued the Secretary of Education.
The Consumer Financial Protection Bureau also hailed the government’s efforts, writing in a statement: “Far too many Americans are still hanging on to loans they received from colleges that have benefited from student deception, and the CFPB will continue to cooperate.” Work with the Department of Education to address predatory student loan debt, protect students and hold wrongdoers accountable.”
The agency sued ITT Tech in 2014, alleging that the institution “pushed its students into taking out expensive loans” even though they were unable to repay them. In 2020, the CFPB, 47 states and the District of Columbia reached a $330 million settlement with ITT Tech and its holding company.
Overall, the Biden administration has approved nearly $32 billion in student debt for 1.6 million borrowers since President Joe Biden took office in January 2021, the agency said in a statement.
The move comes amid questions about whether President Biden will take additional action in the coming weeks to address student debt on a larger scale. He supported canceling up to $10,000 in student debt per borrower during the campaign and said as recently as April he was “looking closely” at canceling additional debt.
“I am considering looking into deleveraging,” Biden told reporters, but indicated he would not go as far as forgiving $50,000 of debt per borrower, which proponents, including members of his own, have urged party, have prompted.
I’m not considering a $50,000 debt reduction,” Biden said at the time. “I’m looking closely at whether or not there will be… additional debt relief and will have an answer on that in the next few weeks.”
Biden previously said he wasn’t sure he could forgive that much of the debt without congressional approval. The White House extended to August 31 a pause in student loan repayments instituted under his predecessor Donald Trump during the COVID-19 pandemic.
The Department of Education said it also told DeVry University its institution must pay $24 million “for approved borrower defense motions,” a motion for students seeking credit forgiveness if they have been cheated by their schools or their school has closed was before they could graduate degrees.
“ITT defrauded hundreds of thousands of students, as we discovered when I was director of the Consumer Financial Protection Bureau,” Richard Cordray, head of Federal Student Aid, said in a statement. “By giving students the credit breaks 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.”
Cardona promised future protections for student borrowers from preparatory lenders.
“The Biden-Harris administration will continue to advocate for defrauded borrowers,” he said, adding that his agency will work to strengthen oversight and enforcement to protect “today’s students from similar deception and abuse.”