The Ministry of Education said it was waiving 18,000 loans for borrowers attending a for-profit university that exaggerated claims that its graduates succeeded in finding jobs and closed in 2016 after a series of blows by the Obama administration.
The U.S. Department of Education said on Wednesday that it is forgiving student debt for thousands of borrowers attending a for-profit university chain that exaggerates the success rate of its graduates in finding jobs.
The Biden administration said it was approving 18,000 loan relief applications from former students of the ITT Institute of Technology, which closed in 2016 after being subject to a series of sanctions by the Obama administration. The new loan release will clear more than $500 million in debt.
The move marks the Biden administration’s efforts to clear the backlog of claims in the Borrower’s Defense Program, which provides loan relief for students who have been cheated by the university. Claims piled up during the Trump administration, causing the plan to stagnate, and the claims were processed only after the federal court requested it. There are now more than 100,000 outstanding claims.
In announcing the new action, Education Minister Miguel Cardona promised to continue to stand up for the students who were deceived by the school.
Cardona said in a statement: “Our actions today will provide thousands of borrowers with a new start and the relief they deserve.” “Many of these borrowers have been waiting for a long time. Time will take time to obtain relief, and we need to work quickly to make a decision for those whose claims are still pending.”
Following another round of loan cancellations in March, the Department of Education has settled $1 billion in federal student debt for 72,000 borrowers. These claims come from former students of for-profit universities.
The borrower advocates appreciated the new approval, but called for prompt relief for thousands of other students whose applications are still pending, including many students studying at ITT Tech.
“It seems that the Biden administration really wants to help those who are delinquent and demobilized,” said Alex Elson, vice president of student defense at the Washington Legal Organization. “But what is even more confusing is that they are so hesitant to use their power to immediately and automatically help the countless additional borrowers who are still waiting.”
Borrower defense is one of several educational programs designed by the Biden administration to reverse Trump-era policies. Cardona will host a series of hearings this month as his agency is considering changes to this and other policies.
The program is rarely used until 2015, when the Ministry of Education received thousands of applications from former students of Corinthian College. This for-profit university was recently closed after it was discovered that it lied to students about the employment rate.
After Collins and other troubled for-profit universities collapsed, the Obama administration took action to make it easier for students to obtain loans. But the reforms were reversed by the Trump administration, which later formulated its own rules to make it more difficult to obtain relief. When the rules were changed, then Education Minister Betsy DeVos stated that forgiving loans had become too easy.
In March of this year, Cardona began to weaken the DeVos regulations when he repealed a formula that allowed the Ministry of Education to only provide partial loan exemptions to students who applied for approval. All borrowers who receive the relief will now receive the full loan.
After the Ministry of Education discovered that the company lied about graduates’ job prospects, many of ITT Tech’s 18,000 claims were approved. The agency stated that ITT made “repeated and serious misrepresentations” about its ability to help students find jobs. The department stated that, in fact, many students said it was more difficult to find a job when they listed ITT on their resumes.
After the department discovered that ITT had misled students’ ability to transfer course credits to other universities, other claims were approved. The department stated that few other places accept credits, which leaves students with “almost no progress” in their academic careers.
The agency said it will notify borrowers of their claim approval in the next few weeks.