208,000 alumni of for-profit ITT Technical Institute will have nearly $4 billion in student loan debt forgiven, the US Department of Education said Tuesday.
The decision came after federal investigations revealed the school, which closed in 2016, defrauded hundreds of thousands of students with false claims about their ability to get jobs or transfer loans and lied about the accreditation of their nursing program.
It follows a move by the Department of Education last year to pay off the debts of 18,000 alumni of ITT Tech students who had filed for loan forgiveness under the “Borrower Defense” program, threatening those whose schools misled or misled them broke laws, got their debts forgiven.
All remaining federal student loans originated from Jan. 1, 2005 until the closure of ITT Tech will be canceled with no further action from borrowers, officials said, resulting in full amortization of the $3.9 billion loan would.
“It’s a very long time coming,” said Thomas Schwarze, a former ITT tech student who participated in a debt strike that began in 2016 in which dozens of students refused to make payments on federal loans needed for the attending school were recorded.
“The accumulated robbery debts have set individual students and their families back decades,” Schwarze said in a statement.
ITT Tech was one of the nation’s largest for-profit educational chains with more than 130 locations, including 14 in California. When it closed, there were 35,000 students enrolled and more than 8,000 employees.
The chain offered technical training and degrees in business administration, computer engineering, information technology and cybersecurity, and marketed itself to students looking for the flexibility to pursue an education while holding their current job.
The television advertisements featured students dissatisfied with their careers or “going through difficult times,” suggesting that enrolling at ITT Tech had changed their fortunes. Much of that news was intentional, one report found.
As part of the school’s “pain funnel,” ITT Tech’s recruiters were trained to bond with prospective students and then ask them questions that made them feel vulnerable — about working dead-end jobs or being unable to support their families financially support — before they made suggestions Enrolling in the school was “an opportunity to make that pain go away,” according to a February report from the Harvard Law School Project on Predatory Student Lending that Senator Richard J. Durbin (D-Ill.) sent to Congress in a speech presented in April.
ITT Tech’s closure followed state and federal investigations into its recruitment and lending practices, which resulted in a Department of Education ban on the school from accepting new students who were on federal financial aid.
The Consumer Financial Protection Bureau sued ITT Tech in 2014, accusing the school of urging students to take out expensive personal loans despite knowing that most of them, many from low-income families, were defaulting on the loans would. The school reached an agreement in 2020, paving the way for $330 million in private student loans for 35,000 alumni of ITT Tech.
So far, most of the Biden administration’s federal student loan forgiveness efforts have focused on students found to have been swindled by private, for-profit colleges like ITT Tech and DeVry University.
“The evidence shows that for years, ITT executives willfully misled students about the quality of their programs in order to benefit from government student loan programs, regardless of the hardship this would cause,” Secretary of Education Miguel Cardona said in a Tuesday Explanation. “The Biden-Harris administration will continue to advocate for borrowers who have been defrauded by their colleges while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.”
The Department of Education also announced Tuesday that it had notified DeVry that it was liable for nearly $24 million in approved borrower defense claims.
With the COVID-19-related pause in federal student loan payments, a measure taken under President Trump in March 2020 and expiring at the end of August, advocates of canceling student debt are hoping for a broader loan forgiveness plan.
Before the pause was extended in May, many expected the Biden administration to forgive $10,000 in student debt for those earning less than $125,000 a year. Collectively, 43 million Americans owe $1.6 trillion in government student loans, the largest portion of consumer debt in the United States after mortgages.
The possibility of such a sweeping move would be a “direct result” of the struggle to forgive student loans at for-profit schools like ITT Tech and the now-defunct Corinthian Colleges, said Thomas Gokey, organizer and co-founder of the Debt Collective, which students at both schools attended helped organize credit strike campaigns and campaigned for debt relief.
The ITT Tech borrowers who participated in that debt strike “were told that they were crazy and that they should shut up and pay their loans,” said Ann Larson, also a co-founder of Debt Collective.
“You fought your way through three presidential administrations,” Larson said. “And now everyone knows they were right all along.”
This story originally appeared in the Los Angeles Times.