America's Student Debt Total Getting $500M Lighter

Loan relief granted to former ITT Tech students
By Newser Editors and Wire Services
Posted Jun 16, 2021 11:05 AM CDT
$500M in Debt Being Erased for Former ITT Tech Students
Students find the doors locked to the ITT Technical Institute campus in Rancho Cordova, Calif.   (AP Photo/Rich Pedroncelli, File)

The Education Department said Wednesday it's erasing student debt for thousands of borrowers who attended a for-profit college chain that made exaggerated claims about its graduates' success in finding jobs and students' ability to transfer credits elsewhere. The Biden administration said it's approving 18,000 loan forgiveness claims from former students of ITT Technical Institute, a chain that closed in 2016 after being dealt a series of sanctions by the Obama administration. The new loan discharges will clear more than $500 million in debt. The move marks 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, reports the AP.

The program was rarely used until 2015, when the Education Department received thousands of claims from former students of Corinthian Colleges, a chain of for-profit colleges that lied to students about job placement rates. Following the collapse of Corinthian, the Obama administration moved to make it easier for students to get loans erased. But the overhaul was reversed by the Trump administration, which later wrote its own rules making it tougher to get relief, with then-Education Secretary Betsy DeVos saying it had become too easy to get loans forgiven. Current Education Secretary Miguel Cardona began chipping away at DeVos' rules in March when he rescinded a formula that allowed the Education Department to give only partial loan discharges to students whose claims were approved. All borrowers granted relief will now get their loans cleared in full. There are now more than 100,000 pending claims.

(More student debt stories.)

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