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Education Dept. extends debt relief to 115,000 former ITT Tech students

The agency is expanding eligibility for loan forgiveness to some students who attended the now-defunct chain as far back as 2008

Education Secretary Miguel Cardona said Thursday that the agency will extend debt relief to more former students of the ITT Technical Institute. ( Sarah Silbiger for The Washington Post)

The Education Department said Thursday it will offer loan forgiveness to 115,000 former students of the defunct ITT Technical Institute, potentially wiping out a total of $1.1 billion debt.

By law, borrowers are eligible to have their federal student loans discharged if they were enrolled, on approved leave or had withdrawn within four months of their college closing. Although ITT Tech closed in 2016, the department announced it is now extending the eligibility window for loan forgiveness to cover students who attended the career school as far back as March 31, 2008.

The department said the for-profit chain steered students into predatory private loans that were portrayed as grants and also lied about the state of its finances. ITT’s malfeasance drove financial resources away from educating students to keep the chain in business for longer than the department says it should have been, resulting in the decision to expand relief.

“For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school,” Education Secretary Miguel Cardona said in a statement Thursday. “Today’s action continues the Department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers.”

The Education Department estimates that 43 percent of the people covered by the expanded window are in default, while about 7,000 have approved claims for debt relief under the borrower defense to repayment program.

Former students of defunct ITT Tech to receive $330 million in private student-loan forgiveness

Students of closed schools typically lose eligibility for debt forgiveness if they complete their degree at another institution. Most of the borrowers covered by the department’s decision did not enroll anywhere else within three years of ITT Tech closing, which means they will not need to take further action to get their debts cleared. Those who did enroll in another school but did not complete their degree may still be eligible for relief, but must submit an application, according to the department.

Before shuttering in 2016, ITT Tech was being investigated by more than a dozen state attorneys general and two federal agencies for alleged fraud, deceptive marketing or steering students into predatory loans. That legal morass led an accrediting body to threaten to end its relationship with the chain, which resulted in the Education Department curtailing ITT’s access to federal student aid.

Policy experts have been calling for the Biden administration to adjust the eligibility of the closed school program to clear out the backlog of debt relief claims. Alex Elson, an attorney at the National Student Legal Defense Network which encouraged the administration to act, applauded Thursday’s news, but urged the department to do more.

“Thousands of former ITT students will finally get the relief they’ve been owed for far too long. At the same time, there are countless others who attended other predatory institutions who are still waiting,” Elson said. “We hope the department will continue to implement our recommendations to make things right for all of them, too.”

The department has previously extended the time frame for other schools, including Corinthian Colleges and the Art Institute.