Washington (CNN) — The Education Department said Tuesday it will write off $3.9 billion in student loan debt for 208,000 students who attended the now-defunct, privately run ITT Technical Institute, raising the total number of loan settlements approved under President Joe Biden. to nearly $32 billion.

Some former ITT Tech students were already eligible for debt cancellation, but now the department will automatically cancel all remaining federal student loan debt that borrowers took out to attend school from January 1, 2005, through closing on September 2016.

ITT Tech closed shortly after the government withdrew its federal funding because it had failed to show that it met certain accreditation standards. At the time, the school was the subject of several state and federal investigations into its hiring tactics, lending practices, and job placement numbers.

“The time has come for students who borrow money to stop bearing the burden of ITT’s years of lies and false promises,” Education Secretary Miguel Cardona said in a statement Tuesday.

“The evidence shows that, for years, ITT leaders intentionally misled students about the quality of their programs in order to take advantage of federal student loan programs, without considering the difficulties this caused,” he added.

Who is eligible for student debt relief?

Former ITT Tech students with federal student loans are eligible for discharge even if they have not previously applied for relief under the Department of Education’s Borrower Defense Program for Repayment, which offers discharge to those who can demonstrate they have been defrauded or cheated by their universities.

There may be some former ITT Tech students with outstanding debt who are ineligible because they attended school before January 2005.

It’s unclear how quickly borrowers will be notified if their debt will be discharged. The Department of Education must first notify the borrower’s student loan servicer before the discharge is processed.

In a call with reporters Tuesday, department officials declined to give an exact timeline for ITT Tech students. But some former Corinthian College students, who were granted debt relief in June, have already seen its debt cancelled, said Federal Student Aid chief Richard Cordray.

He added that eligible ITT Tech borrowers will not have to pay anything more on their loans, even if the pandemic-related payment pause expires before they receive full discharge. Federal loans borrowed to attend ITT Tech will remain in forbearance.

The Department of Education also announced Tuesday that it has formally notified DeVry University that it must pay millions of dollars for previously approved student debt cancellations for some 1,800 of its students. DeVry University is still in business, and the government wants to recoup the cost of the institution’s student loan cancellations. It’s hard for the government to recover money from universities like ITT Tech that have already closed their doors, Cordray said.

Biden weighs broad cancellation of student debt

Biden is expected to announce in late August whether he will more broadly write off the debt of the 43 million federal student loan borrowers.

Some key Democratic lawmakers, such as Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren, have called on Biden to write off $50,000 per borrower. But Biden has consistently refused to write off that amount and has suggested he would support eliminating $10,000 per borrower, in line with a promise he made in the 2020 campaign.

So far, Biden has taken a more targeted approach to student debt relief. Her administration has authorized the write-off of nearly $32 billion so far — more than any other administration — much of it for borrowers who were defrauded by their private colleges and for borrowers with permanent disabilities.

It has also temporarily expanded the Public Service Loan Forgiveness program, which forgives government and nonprofit workers’ debt after 10 years of payments, and made changes to repayment plans based on revenue, bringing millions of borrowers closer to forgiveness.

Biden has also extended the pandemic-related pause on federal student loan payments multiple times. Borrowers’ balances have been effectively frozen for more than two years, with no payments required on most federal student loans since March 2020, when the coronavirus pandemic sent many Americans into lockdown. During this time, interest has stopped accruing and collections on unpaid debt have been on hold.

The pause expires on August 31, but Biden has not yet decided whether to extend it again.

Americans’ attitude toward student debt relief is sharply divided along party and generational lines.

A majority of Democrats in a May CNN poll (56%)—and an even larger majority of self-described liberals (69%)—say the government is doing too little on student loan debt, while only a third of Republicans and those who call themselves conservatives say the same.



Source link