U.S. Department of Education Cancels $500 Million of Student Debt for Defrauded Borrowers

The US Department of Education announced on June 16 that it approved the cancellation of about $500 million worth of federal student loans for 18,000 borrowers who attended the non defunct for-profit ITT Technical Institute.

ITT Technical Institute, which closed down in 2016 after the government pulled millions in federal loans and grants, misled its students about the ability to transfer their credits to other institutions, the Education Department said.

“The Department found that credits rarely transferred and borrowers made little to no progress along their educational journey, yet were saddled with student loan debt as a result of their time at ITT,” the department said in a statement.

The department said that they will begin notifying borrowers of their approvals in the coming weeks and will work quickly to discharge their loan balances.

According to the department, the move is part of wider efforts to provide “targeted loan relief” and to ensure borrower defense and other relief programs are delivered as promised.

“Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them,” Education Secretary Miguel Cardona said, adding that the move was part of the Biden administration’s efforts “to stand up for borrowers when their institutions take advantage of them.”

“Many of these borrowers have waited a long time for relief, and we need to work swiftly to render decisions for those whose claims are still pending. This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again,” Cardona also said.

The latest loan cancellation brings the total under the Biden administration to $1.5 billion for about 90,000 defrauded students, according to the department.

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