Defrauded borrowers are to be forgiven almost $4 billion in debt by the Department of Education, in the continuing fallout of ITT Technical Institute.
Until 2016, ITT Educational Services was one of the largest for-profit educational operator in the U.S. It shut its doors very abruptly, after the Department of Education pulled accreditation on many of its schools. They were little more than degree mills, providing poor education while using misled students to rake in federal student loan dollars. They were also found to be widely dishonest, especially about hiring right after graduation or whether students could transfer ITT Tech credits to more respectable schools.
“The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause,” said U.S. Secretary of Education Miguel Cardona in a statement on Tuesday.
“The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse,” Cardona added.
Promising to address the crisis of student loans was one of the pillars of President Biden’s campaigns. Pressure continues for him to issue a blanket cancellation of all student debt in the wake of the pandemic, a rash of loan-fraud schools like ITT Tech, and the overburdening inflation we’ve seen in the past two years.
Defrauded borrowers who took out federal loans to attend schools belonging to ITT Educational Services will not have to apply for debt relief, it will be an automatic process, according to the Education Department. It will affect approximately 208,000 people.
On Wednesday, President Biden announced he would also be forgiving between $10,000 and $20,000 in debt for all student loan borrowers making under $125,000 a year, one of the largest ever relief plans from the Department of Education.
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