Biden has canceled over $9 billion in student loan debt

The Department of Education has canceled more than $9 billion in student loan debt since President Biden has come into office with moves that will affect more than 563,000 borrowers.

The agency confirmed the new top-line figure upon its recent announcement detailing its cancellation of $1.1 billion in debt for 115,000 borrowers that attended ITT Technical Institute, which is now defunct. 

The department said borrowers receiving relief attended ITT during a period in which the institution misrepresented its finances and misled students about “unaffordable private loans that were allegedly portrayed as grant aid.”

“ITT’s malfeasance drove its financial resources away from educating students in order to keep the school in business for years longer than it likely would otherwise have, resulting in debts that are being discharged starting today,” the agency said. 

Education Secretary Miguel Cardona said ITT, which closed permanently in 2016, “hid its true financial state from borrowers” for years “while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school.”

Cardona extended the window for relief to March 31, 2008, after a review by the agency into events that led to the closure of the institution, as well as filings with the Securities and Exchange Commission and the company’s bankruptcy court proceedings.

The agency said the date marks when the company’s leaders “publicly disclosed the start of a financial scheme that kicked off a series of misrepresentations to hide the true nature of the school’s finances following a public loss of outside financing.” 

The office said it is providing automatic relief to eligible borrowers who attended any institution that shut down between November 1, 2013, and July 1, 2020, and did not enroll in another institution within three years of the school’s closure.

Previously, borrowers that were students at ITT in its final four months of operation received automatic relief in 2019.

Cardona said the recent move by the agency to cancel more than $1 billion in debt for former ITT students continues the agency’s commitment to “improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers.”

“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 said.

The announcement by the office came days after the Biden administration announced plans to forgive $5.8 billion in federal student loans for over 323,000 borrowers that have been identified by the Social Security Administration as totally and permanently disabled. 

The news comes as progressives have ramped up pressure on Biden to step up efforts to cancel more student loan debt for borrowers as the government prepares to end the current pause on federal student loan payments.

The moratorium on student debt payments has allowed over 43 million borrowers nationwide the opportunity to temporarily stop payments amid the ongoing pandemic.

But, as of now, borrowers are still scheduled to resume paying off the more than $1.6 trillion in debt owed to the federal government when the moratorium lapses at the end of January.

Updated at 11:12 a.m.

Tags For profit schools ITT Technical Institute Joe Biden Miguel Cardona Student loan

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