Much of the other debt relief will benefit victims of for-profit college fraud, many of whom have been waiting years for the Department of Education to process their forgiveness claims. The most recent action will automatically cancel the debt borrowed by 115,000 students who left ITT Tech without completing their program after March 2008.
About 43% of those borrowers are currently in default on their loans, the Department of Education said. The move was made after a new review of the problems at ITT Tech found that these borrowers attended the school during a period of time when the school misled students into taking out private loans that were allegedly portrayed as grant aid and engaged in widespread misrepresentations about the state of the institution’s financial health.
“Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers,” said Education Secretary Miguel Cardona in a statement.
“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,” he added.
There are many borrowers who are eligible for debt relief that could still be waiting, according to Student Defense, a nonprofit group that advocates for students’ rights and has been calling on the Department of Education to speed up the process.
“Thanks to Secretary Cardona and President Biden, thousands of former ITT students will finally get the relief they’ve been owed for far too long. At the same time, there are countless others who attended other predatory institutions who are still waiting,” said Student Defense Vice President Alex Elson in a statement.
Democrats push for broader debt cancellation
Biden, who said during the presidential campaign that he would support canceling $10,000 per borrower, has repeatedly resisted the pressure since taking office, arguing that the government shouldn’t forgive debt for people who went to “Harvard and Yale and Penn.” As of now, he has directed Cardona to write a memo on the executive branch’s legal authorities to cancel debt.
Borrower balances have effectively been frozen for more than a year, with no payments required on federal loans since March 2020. During this time, interest has stopped adding up — saving the average borrower about $2,000 over the first year — and collections on defaulted debt have been on hold.
The relief is even more significant for those who work in the public sector and may be eligible for loan forgiveness after 10 years. They are still receiving credit toward those 10 years of required payments as if they had continued to make them during the pandemic, as long as they are still working full time for qualifying employers.