The Department of Education just approved $500 million for student debt relief for 18,000 borrowers
Published Wed, Jun 16 20216:02 AM EDTUpdated Wed, Jun 16 202112:33 PM EDT
ITT Educational Services, one of the largest operators of for-profit technical schools, ended operations at all of its ITT Technical Institutes in 2016, citing government action to curtail the company’s access to millions of dollars in federal loans and grants, a critical source of revenue. (Photo by Jahi Chikwendiu/The Washington Post via Getty Images)The Washington Post | The Washington Post | Getty Images
The Department of Education announced Wednesday it has approved the cancellation of about $500 million worth of federal student loans held by 18,000 borrowers who attended ITT Technical Institute. The borrowers will have 100% of their loans canceled.
“Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them,” Education Secretary Miguel Cardona said in a statement. “Today’s action is part of the Biden-Harris Administration’s continued commitment to stand up for borrowers when their institutions take advantage of them. Many of these borrowers have waited a long time for relief, and we need to work swiftly to render decisions for those whose claims are still pending. This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again.”
ITT closed in 2016
. In September
, 48 state attorneys general and the Consumer Financial Protection Bureau ruled that Peaks Trust, a private loan program run by ITT Tech and affiliated with Deutsche Bank entities, must forgo the collection of all outstanding education debt. The judgment resulted in over $330 million in private student-loan forgiveness for 35,000 former ITT students.
, ITT’s former chief executive, Kevin Modany, and former chief financial officer, Daniel Fitzpatrick, settled fraud cases with the Securities and Exchange Commission for allegedly deceiving investors. Neither Modany nor Fitzpatrick admitted or denied wrongdoing but agreed to pay penalties of $200,000 and $100,000, respectively.
The Education Department emphasizes that the recent actions are part of larger efforts to provide “targeted loan relief.” In March
, the Biden administration announced that some 72,000 borrowers who were defrauded by their schools will receive student loan forgiveness, totaling up to $1 billion.
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Will your student loan debt be forgiven?
Biden has also requested the Department of Education and the Justice Department craft a memo about the use of executive authority to cancel student loans.
Representatives for the Department of Education have confirmed to CNBC Make It that they are working on reviewing debt cancellation options and that the agency is seeking feedback on a variety of related topics.
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