Students who took out federal loans to attend graduate school ITT Technical Institute from 2005 will automatically have that debt forgiven after authorities uncovered ‘widespread and pervasive misrepresentations’ at the defunct university chain for-profit, the Biden government announced on Tuesday.
The action will forgive $3.9 billion in federal student debt for 208,000 borrowers, the Department of Education said. The debt is forgiven using a federal rule known as the borrower’s defense, which is intended to protect college and university students who make false advertisements or commit fraud.
“Evidence shows that for years, ITT executives intentionally misled students about the quality of their programs in order to take advantage of federal student loan programs, regardless of the problems that would cause,” the secretary told Education, Miguel Cardona.
Debts canceled for 1.6 million borrowers
The action adds to the growing list under the Biden administration of piecemeal student debt write-offs — a similar action in June promised to erase $5.8 billion in debt tied to Corinthian Colleges. However, no indication was given of a broader cancellation of student debt.
President Joe Biden has promoted student debt forgiveness as a presidential candidate and has been considering for months to write off up to $10,000 per borrower. He recently promised a decision by the end of August, but Tuesday’s announcement did not inform his thinking.
Through targeted cancellations for specific groups of borrowers, the government says it has now approved the retirement of nearly $32 billion in student debt for 1.6 million borrowers.
The new measure will automatically cancel any remaining federal student debt that was used to attend the ITT Tech facility from January 1, 2005 until it closed in 2016.
At its peak, ITT was among the nation’s largest for-profit university chains, with 130 campuses in 38 states. The firm abruptly shut down after facing stiff penalties from the Education Department amid accusations that the company pushed students into risky loans and misled them on the quality of university programs.
The decision was welcomed by groups representing students.
“This is a life-changing announcement for thousands of people who just wanted to make their lives better and who trusted the wrong people to help them do so,” said Libby Webster, senior counsel for the not-for-profit organization Student Defence.