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HomePolicy$500M Loan Relief Granted for Defrauded For-Profit College Students

$500M Loan Relief Granted for Defrauded For-Profit College Students

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The US Education Department (ED) is erasing student debt for thousands of borrowers who attended the ITT Technical Institute. This is expected to clear more than $500 million in debt.

The ITT Technical Institute was a for-profit college chain that closed in 2016 after several sanctions by the Obama administration. The Education Department also found that it was making exaggerated claims about its graduates’ job success rates.

“ED’s review of the evidence found that ITT made repeated and significant misrepresentations to students related to how much they could expect to earn and the jobs they could obtain after graduation between 2005 and the institution’s closure in 2016,” the ED wrote in a press release. 

“In reality, borrowers repeatedly stated that including ITT attendance on resumes made it harder for them to find employment, and their job prospects were not improved by attending ITT.”

The ED approved other claims after learning that ITT also misled students about their ability to transfer course credits to other colleges. According to the ED, the credits were rarely accepted elsewhere, preventing students from progressing further in their academic careers.

Biden Administration Commitment to Education

The decision to erase debt is in line with the Biden administration’s promise to help improve education in the US. In this case, it demonstrated the government’s commitment to help students defrauded by colleges and improve borrower protections.

According to US News, claims in the borrower defense program remained largely unanswered during the Trump administration. As a result, the program stalled and only started processing claims after demands from federal court. There are currently more than 100,000 pending claims.

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

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