Education Department Forgives $3.9 Billion in Debt for Former ITT Tech Students

Last August, the Education Department forgave $1.1 billion in loans for 115,000 former ITT students who said the college took advantage of its borrowers, under a legal provision known as closed-school discharge.

ITT Tech shuttered in 2016 after the government banned it from enrolling new students receiving federal aid. “The damage done to our students and employees, as well as to our shareholders and the American taxpayers, is irrevocable,” ITT said at that time.

To date, according to the Education Department, the Biden administration has paid off $13 billion in loan relief related to institutions that it says swindled borrowers.

“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,” US Secretary of Education Miguel Cardona said in a press release.

The department is also asking DeVry University,

another chain of for-profit colleges, pay nearly $24 million to cover approved borrower defense applications.

Earlier this year, the department said it approved claims after finding that DeVry had misled prospective students nationwide by misrepresenting its job placement rate. The chain advertised that 90% of its graduates who actively sought employment landed jobs in their field of study within six months, but its actual job placement rate was about 58%, the agency said.

Tuesday’s actions come just two weeks before the pandemic pause on student loan debt payments is set to expire—although industry experts predict the Biden administration will extend the freeze ahead of the Aug. 31 deadline.

Write to Isabelle Sarraf at [email protected]