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The US Department of Education is canceling more than $1.1 billion in student debt for 115,000 borrowers who attended the now-defunct ITT Technical Institute, once one of the nation’s largest for-profit college chains by revenue.
The Education Department announced Thursday that the move is based on “a new review of the problems leading up to ITT’s closure.”
The former students who are eligible for the debt forgiveness didn’t finish their degrees and left the school on or after March 31, 2008, which is “when the company’s executives publicly disclosed the start of a financial scheme that kicked off a series of misrepresentations to hide the true nature of the school’s finances following a public loss of outside financing,” The DoE said.
The Department estimates that 43 percent of the borrowers are now in default.
“For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school,” Secretary of Education Miguel Cardona said in a statement.
ITT Tech filed for bankruptcy and shut down in 2016, after the government barred it from enrolling new students who were on federal aid.
“Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers,” Cardona added.
“At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system.”
The Education Department has now canceled $9.5 billion in student debt this year for over 563,000 borrowers.
Despite President Joe Biden’s moves to cancel student debt, he faces pressure from more liberal Democrats who would like to see broader action to eliminate student debt across the board.
Biden has asked the Education Department and the Department of Justice to review his authority to take executive action on the matter.