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The ITT Technical Institute campus is seen in Rancho Cordova, California, on September 6, 2016. Students who used federal loans to attend ITT Tech prior to 2005 will have their debt automatically forgiven.
Rich Pedroncelli/AP
In the year Students who used federal loans dating back to 2005 to attend ITT Technical Institute will have their loans immediately canceled after officials at the for-profit college chain discovered “widespread and misleading misrepresentations,” the Biden administration announced Tuesday.
The move would erase $3.9 billion in federal student debt for 208,000 borrowers, according to the Education Department. The debt is being forgiven using a federal law known as borrower protection, which protects students from colleges that make false claims or otherwise commit fraud.
“The data shows that ITT leaders deliberately misrepresented the quality of their programs for years in order to benefit students from federal student loan programs, without considering the potential problems this could cause,” Education Secretary Miguel Cardona said.
It adds to the administration’s growing list of partial student debt cancellations — a similar move in June promised to wipe out $5.8 billion in debt tied to Corinthian Colleges — but left no answer on broader student debt cancellation.
President Joe Biden has supported debt cancellation as a presidential candidate and for months has been considering canceling up to $10,000 per borrower. He recently promised a decision by the end of August, but Tuesday’s announcement didn’t shed new light on his thinking.
With targeted cancellations for certain groups of borrowers, the administration said it has now approved nearly $32 billion in student debt for 1.6 million borrowers.
The new policy will erase any federal student loan debt that was used to pursue IT from January 1, 2005 through the end of 2016.
At its peak, ITT was one of the largest for-profit college chains in the country, with 130 campuses in 38 states. The company abruptly shut down after facing major sanctions from the Department of Education for pushing students into risky loans and misrepresenting the quality of educational programs.
The Department of Education has already approved the cancellation of $1.9 billion in debt owed to ITT Tech students, specifically for students who applied for help saying they were wronged by the company. The new policy does not require borrowers to apply for relief.
Federal officials based the decision on findings from several state attorneys general, the Consumer Financial Protection Bureau and the nonprofit Veterans Education Achievement.
Investigators found extensive evidence that ITT Tech made false claims about its students’ ability to find jobs after graduation, the agency said. They also found that the chain misled students about their ability to get credit to other schools and about the chain’s nursing program.
“ITT defrauded hundreds of thousands of students,” said Richard Cordray, the federal student aid commissioner who oversees student loans. “By providing students with the loan relief they deserve, we are giving them the opportunity to continue their educational journey without the burden of student debt from Honest Institutions.”
The decision drew applause from student groups.
“This is a life-changing announcement for thousands of people who want to improve their lives and trust the wrong people to do it,” said Libby Webster, senior counsel for the nonprofit Student Advocacy.
Tasha Berkhalter enrolled at ITT Tech in 2006 to pursue a career in criminal justice after being honorably discharged from the Army. Recruiters promised her that she would easily find a job after graduation. But after she got her bachelor’s degree, no one would hire her.
“It was a degree that no one took seriously. When I told recruiters where I went to college, they would show me the door,” said Berkhalter, of Lima, Ohio.
Berkhalter has already had about $100,000 of her debt written off under the lender’s protection order and said she expects more to be written off soon.
“The cloud has been lifted from my head,” she said. “I know hundreds of thousands of former students like me are finally getting the relief they deserve.”
In a separate move, the Department of Education has begun the process of recovering $24 million from DeVry University to make up for fraud claims by the federal government.
In February, the Biden administration approved $70 million in relief for 1,800 former DeVerry students after the Department of Education lied about the success of its graduates to get new students to enroll. It is the first time the agency has ever approved such claims for an existing facility.
DeVry will now have the opportunity to present arguments as to why he should not be held liable. DeVry officials are reviewing the department’s announcement, spokeswoman Hessie Fernandez said. She emphasized that the school has undergone a change of ownership and leadership since the lawsuit was filed.
“We continue to believe that the department will release deviary calculations and graduation results in specific announcements,” Fernandez said.
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