The Education Department (ED) is discharging $3.9 billion in student loans for 208,000 defrauded former students who attended the for-profit ITT Technical Institute (ITT) from January 1, 2005, through its closure in September 2016.
This action follows last year's discharge of $1.9 billion for 130,000 ITT students.
“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” U.S. Secretary of Education Miguel Cardona said. “The evidence shows that 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."
The Obama administration had targeted for-profit colleges for predatory lending, but these actions were stalled under the Trump administration through Education Secretary Betsy DeVos.
"The Biden-Harris administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse," Cardona said.
'We have the receipts'
Defrauded ITT students were represented by the Project on Predatory Student Lending, which called on the Department to fully cancel the loans of all ITT students.
“ITT was a sham institution, and we have the receipts,” Eileen Conner, president and director of the Project on Predatory Student Lending, said in a statement. “Every student who attended ITT was impacted by its fraud and now, because of their resolve and perseverance, they will receive the justice they deserve by having their loans canceled.”
Credits that students earned at ITT weren’t transferable, and many ITT campuses lacked internet and training equipment, according to findings. The investigation into ITT was a joint effort of attorneys general across the country, the Consumer Financial Protection Bureau (CFPB), and Veterans Education Success.
“ITT defrauded hundreds of thousands of students, as we identified when I was the director of the Consumer Financial Protection Bureau,” Richard Cordray, chief of Federal Student Aid, said in a statement. “By delivering the loan relief students deserve, we are giving them the opportunity to resume their educational journey without the unfair burden of student debt they are carrying from a dishonest institution.”
ITT borrowers will have federal student loans discharged without any additional action on their part. The Education Department also announced that it expanded the window for borrowers who attended but did not graduate from ITT to receive closed school discharges.
Other ED targets
ITT isn’t the only for-profit institution the Education Department has investigated.
In June, the department announced a settlement of claims that would give roughly 264,000 student loan borrowers approximately $7.5 billion in debt relief.
In today’s announcement, the Education Department also stated it formally notified DeVry University that it is required to pay millions of dollars for approved borrower defense applications.
Additionally, it announced the approval of discharges for 100 borrowers who enrolled in the Medical Assistant or Medical Billing & Coding Program at Kaplan Career Institute’s Kenmore Square location in Massachusetts from July 1, 2011 to February 16, 2012.
Borrowers saddled with college debt because of predatory lending practices at other for-profit institutions should see relief.
Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda