Department of Education Approves Student Loan Relief

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Department of Education Approves Student Loan Relief

The U.S. Department of Education recently approved 18,000 borrower defense claims for individuals who attended ITT Technical Institute (ITT), according to a news release. These borrowers will receive 100% of loan discharges, resulting in approximately $500 million in relief. This brings total loan cancellation under borrower defense by President Joe Biden’s administration to $1.5 billion for approximately 90,000 borrowers, the department reports.

These approvals cover two categories of claims submitted by borrowers who attended ITT: their likely employment prospects and the ability to transfer credits. This is the first approval of a new category of borrower defense claims by the department since January 2017, according to the news release.

On employment prospects, the department is expanding findings that it had previously made just for students who attended ITT in California to cover borrowers regardless of where they attended. The department’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. 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.

Similarly, the department found that ITT misled students about the ability to transfer their credits to other institutions from January 2007 through October 2014, according to the news release. The department found that credits rarely transferred, and borrowers made little to no progress along their educational journey yet were saddled with student loan debt as a result of their time at ITT.

The department, in partnership with the Consumer Financial Protection Bureau and the Iowa Office of the Attorney General, as well as Veterans Education Success, uncovered the students had misinformation about transferring their credits.

The department will begin notifying borrowers of their approvals in the coming weeks and will then work expeditiously to discharge the approximately $500 million loan balances for these borrowers.

In addition to the approval of these claims, the department announced plans to conduct rulemaking on borrower defense, total and permanent disability discharges, and other items, starting with public hearings on June 21, 23 and 24.

More information on the upcoming public hearings is available here.

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