“It’s time for student borrowers to stop shouldering the burden of ITT’s years of lies and false promises,” Education Secretary Miguel Cardona said in a statement Tuesday. “The evidence shows that for years, ITT leaders deliberately misled students about the quality of their programs in order to take advantage of federal student loan programs, without considering the hardships this would cause,” he added.
Who is eligible for student debt relief?
Former ITT Tech students with federal student loans are eligible for cancellation even if they have not previously applied for relief under the Department of Education’s borrower defense repayment program, which offers cancellation to those who can prove they were defrauded or misled from their colleges. There may be some former ITT Tech students with outstanding debt who are ineligible because they attended the school before January 2005. It is unclear how quickly borrowers will be notified if their debt will be canceled. The Department of Education must first notify the borrower’s student loan servicer before the cancellation can be processed. In a call with reporters Tuesday, department officials did not give an exact timeline for the ITT Tech students. But some former Corinthian College students who were granted debt relief in June have already had their debt canceled, Federal Student Aid chief Richard Cordray said. He added that eligible ITT Tech borrowers will not have to pay anything more on their loans even if the pandemic-related payment freeze ends before they receive the full cancellation. Federal loans borrowed to attend ITT Tech will remain in forbearance. The Department of Education also announced Tuesday that it has formally notified DeVry University that it is required to pay millions of dollars in student debt cancellations previously approved for about 1,800 of its students. DeVry University is still operating, and the government wants to recoup the cost of student loan write-offs from the institution. It’s difficult for the government to get money back from colleges like ITT Tech that have already closed their doors, Cordray said.
Biden Weighs Broad Student Debt Relief
Biden is expected to announce by the end of August whether he will more broadly cancel student loan debt for the 43 million federal student loan borrowers. Key Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren, are calling on Biden to cancel $50,000 per borrower. But Biden has repeatedly pushed back on the repeal so far that he has suggested he would support a write-off of $10,000 per borrower, in line with a 2020 campaign pledge. Until now, Biden has taken a more targeted approach to student debt relief. His administration has approved the cancellation of nearly $32 billion so far — more than any other administration — mostly for borrowers cheated out of their for-profit colleges and for permanently disabled borrowers. He has also temporarily expanded the Public Service Loan Forgiveness program that forgives the debt of government and nonprofit employees after 10 years of payments and made changes to income-based repayment plans, bringing millions of borrowers closer to forgiveness. Biden has also extended the pandemic-related pause in federal student loan payments several times. Borrower balances have been effectively frozen for more than two years, with no payments required on most federal student loans since March 2020 — when the coronavirus pandemic put many Americans on lockdown. During this period, interest has stopped accruing and default collections have been put on hold. The hiatus is set to expire on August 31, but Biden has not yet decided whether to extend it again. Americans’ attitudes toward student debt relief are sharply divided along party and generational lines. A majority of Democrats in a May CNN poll (56%) — and an even larger majority of self-described liberals (69%) — say the government is doing too little about student loan debt, while only a third of Republicans and Self-proclaimed conservatives say the same. This story has been updated with additional information.
