Who qualifies for nearly $4 billion in automatic student loan forgiveness under new Biden initiative

The Biden administration on Tuesday announced $3.9 billion in automatic student loan forgiveness for more than 200,000 borrowers through a new initiative to provide relief to borrowers who have been defrauded by for-profit schools. Here are the details.

Student Loan Forgiveness for Borrowers Who Attended ITT Technical Institutes

The Biden administration is implementing nearly $4 billion in student loan forgiveness through a group discharge process under the Borrower Defense Program until paid. Borrower Defense can provide student loan forgiveness to borrowers who have been defrauded by their school through false promises or misrepresentations about key elements of a degree or certificate program.

Today’s group release announcement will forgive federal student loan debt for borrowers who attended ITT Technical Institutes (ITT) from January 1, 2005 until its closure in September 2016, according to the Department of Education. ‘Education. ITT was a national chain of for-profit institutions that collapsed in 2016 following allegations of widespread misconduct.

While borrowers generally must submit a formal request to seek Borrower Defense Until Repayment, today’s group release will automatically apply to all such ITT borrowers, even if they have not submitted Borrower’s Defense Claim. The action is expected to benefit more than 200,000 federal borrowers.

The move mirrors a similar group discharge announced in June for borrowers who attended Corinthian Colleges, another national chain of for-profit schools that collapsed under the weight of misconduct allegations. This initiative will cancel $6 billion in student loans for more than half a million borrowers.

ITT accused of general misconduct

The Education Department released findings supporting the mass termination decision that ITT had engaged in a pattern of widespread misconduct.

“ITT engaged in widespread and pervasive misrepresentations regarding students’ ability to obtain employment or transfer credits, and lied about programmatic accreditation” of certain degree programs, according to the Department of Education. ‘Education. The Federal Consumer Financial Protection Bureau (CFPB) had also discovered that ITT had “pressured its students into entering into expensive private contracts. [student] loans, even though ITT knew that most of its students would eventually default.

“ITT has defrauded hundreds of thousands of students, as we identified when I was director of the Consumer Financial Protection Bureau,” federal student aid chief Richard Cordray said Tuesday. give them the opportunity to resume their academic journey without the unfair burden of student debt they carry from a dishonest institution.”

Advocates praise student loan forgiveness initiative

Advocacy groups for student borrowers praised the actions of the Department of Education on Tuesday.

“ITT was a fictional institution, and we have the receipts,” Eileen Connor, president and director of the Project on Predatory Student Lending, said in a statement. “Every student who attended ITT was affected by its fraud and now, thanks to their determination and perseverance, they will receive the justice they deserve by having their loans cancelled. We have been fighting for these students for decades. years, and we want to thank President Biden, Vice President Harris, Secretary Cardona, the Department of Education for acknowledging the harm done to these students and canceling their fraudulent debts.

“”The Department of Education has provided long-awaited relief to borrowers who have been wronged by their schools and have struggled to repay the tens of thousands of dollars they borrowed for an education that did not bring often of little or no value,” Kyra Taylor, staff attorney at the National Consumer Law Center, said in a statement. “The Department’s decision to provide federal loan relief means these students can finally begin to recovering from their experiences at these predatory schools Today’s decision will transform the financial futures of many of these borrowers.

Some borrower advocates have urged the Biden administration to scale up automatic student loan forgiveness for ITT and Corinthians borrowers.

“This latest announcement from the Department of Education of massive relief for for-profit borrowers has implications for the ongoing fight to cancel all student debt,” said the Debt Collective, a debtors’ union that defends student borrowers, in a press release. “Once again, we find that collective leaves are both necessary and possible. Any future loan cancellation should be automatic, with no cumbersome application process or unnecessary paperwork. »

Further reading on the student loan

Biden administration ready to implement mass student loan forgiveness as decision could come any day

$6 Billion Student Loan Forgiveness Settlement Removes Barrier: 5 Key Takeaways

Did the Biden administration just drop a big hint on student loan forgiveness?

If You’ve Been To These Schools, You May Qualify For Student Loan Forgiveness: Here’s What To Do

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