Education Department erasing debt of students defrauded at for-profit college

Education Department erasing debt of students defrauded at for-profit college
© Greg Nash

The Department of Education is erasing the debts of students who were defrauded at a for-profit college.

The agency said in a statement that it had approved $500 million in loan cancellation for 18,000 borrowers who were defrauded by ITT Technical Institute.

ITT is accused of misleading students on their likely employment prospects after graduation and the ability to transfer their credits to other schools.

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The school, between 2005 and 2016, made “repeated and significant misrepresentations” to students about how much they could expect to earn and the jobs they could get after graduating, the agency said.

Students told the department that including ITT on their résumés actually made it seem more difficult to find employment, and their job prospects were not improved.

Furthermore, the Education Department said that ITT credits rarely transferred to other institutions between January 2007 and October 2014.

ITT closed its campuses in September 2016 after the Obama administration barred the school from enrolling students that relied on federal financial aid.

The agency said it will begin notifying borrowers of approvals “in the coming weeks,” and will work “expeditiously” to discharge the loan balances.

Education Secretary Miguel CardonaMiguel CardonaBiden celebrates anniversary of Americans with Disabilities Act Biden's Education Department must choose accountability or a 'Marbury v. Madison' moment Biden administration cancels .6M in student loan debt for fraud victims MORE said in a statement that the loan forgiveness “will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to 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,” he continued. “This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again.”

The loans were forgiven under the borrower defense program, which is aimed at forgiving debt for students who have been defrauded by schools. The agency announced in March that it canceled approximately $1 billion in loans from 72,000 borrowers under the program.