The Education Department announced Tuesday that a total of $3.9billion in student debt will be forgiven for all former ITT Technical Institute students.
The department will also initiate a process to hold DeVry University, a for-profit that was found to falsely advertise job-placement rates, accountable to recoup $24million to the department for borrower-defense claims.
“In recent years too many for-profit colleges and career schools have been caught defrauding and deceiving their students. Their entire business model relies on driving students into debt,” said Education Secretary Miguel Cardona. “Years of investigation have indicated that ITT Technical Institute was among the worst offenders.”
So far the Biden administration has discharged $32billion for nearly 1.6million borrowers who say they were defrauded by their colleges. Tuesday’s announcement will also be the first time the department initiates a process to recoup funding from a college with approved borrower-defense claims that are still open.
A total of 208,000 former ITT students who were enrolled after 2005 will have their debts automatically forgiven, even if students have not yet applied for borrower defense. The department was not able to provide a specific time frame of when the debts will be discharged.
ITT, a for-profit college chain, closed its 130 campuses in 2016 after several investigations and lawsuits pertaining to misleading students about employment prospects and the ability to transfer credits to other colleges.
Tasha Berkhalter, a former ITT student and veteran who had a borrower-defense claim approved in 2021, said, “I chose the school because they had advertised its high-tech criminal justice program. Their initial staff told me that the GIBill would cover my full tuition.” She continued, “ITT Tech was not a high-tech school at all. The GIBill did not fully cover my tuition, and I was forced to take federal and personal student loans on top of my GIBill money.”
In June 2021, the department approved 18,000 borrower defense claims for former ITT students.
“This action represents another milestone in the years-long effort to achieve justice for student borrowers whose institutions defrauded them and taxpayers. By automating the remaining discharges of ITT borrowers, the Education Department will ensure all of ITT’s victims will, at last, realize greater financial security after years of uncertainty and waiting,” said Sameer Gadkaree, president of the Institute for College Access and Success.
The department will also begin a process that could hold DeVry University, a for-profit with 40 locations that are still open, liable to pay $24million to the Education Department to cover the cost of borrower-defense discharges that were approved for former DeVry students in February. Borrower-defense claims for 1,800 former DeVry students totaling $71.7million were approved by the department after the department found that the for-profit chain was advertising false job-placement rates.
The department has notified DeVry that the process to recoup the funding has been initiated, and DeVry will have 20 days to respond or request a hearing.
In response to an email from Inside Higher Ed, a DeVry spokesperson said, “DeVry University remains deeply committed to student success and preparing students to thrive in careers shaped by continuous technological change. Our alumni get significant value from their degrees and work at some of the most respected businesses and organizations in the nation.”
They continued, “It is worth reiterating that those student claims date back to advertising that was used between 2008 and 2015, predating DeVry’s establishment as an independent institution with a new board and leadership. The Department of Education’s announcement was anticipated based on the February news release. We are in receipt of the notice from the department and are reviewing it. We continue to believe the department mischaracterizes DeVry’s calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached.”
The department will not seek similar recoupment for ITT, according to a department official, because of the inherent difficulties in recouping funds from a closed institution.
FAQs
As of August 2022, a total of 208,000 former students who attended ITT Technical Institute (or ITT Tech) will now see full discharge of their student loan debt after the U.S. Department of Education reviewed the extent of the misconduct leading up to the school's closure.
Will all ITT Tech loans be forgiven? ›
Today, the U.S. Department of Education (Department) announced that it will discharge all remaining federal student loans that borrowers received to attend ITT Technical Institute (ITT) from January 1, 2005, through its closure in September 2016.
How much will I get back from ITT Tech lawsuit? ›
ITT Tech Student Settlement Claim Amount
The first payment of $10 has already been credited to the accounts of beneficiaries. Eligible students may receive a refund of up to $7,000 to help alleviate the burden of their loans. In some cases, the court may even discharge the entire loan if it is deemed excessively high.
How much is the ITT student claim settlement? ›
ITT Students' $1.5 Billion Settlement Heard by Judge In Bankruptcy Settlement Today | Press Release — Project on Predatory Student Lending.
What happens to your federal student loans if you drop out of school group of answer choices? ›
What Happens to Student Loans if You Withdraw? If you have federal student loans, monthly payments are deferred until you graduate, leave school or if your course load drops below half-time enrollment. After that, you'll get a six-month grace period before you need to start making monthly payments on your loans.
How do I get my ITT student loans forgiven? ›
If you feel like you were misled by ITT into taking out federal student loans, you can apply to have those discharged through a process known as Borrower Defense to Loan Repayment. Learn more about the process through the U.S. Dept. of Education here.
Can I get my money back from ITT Tech? ›
If ITT Tech issued you Temporary Credits and you made payments to UAS, FirstSource, Security Credit Systems, Inc., Premiere Credit NA, or General Revenue Corporation, you are entitled to receive money back.
Are ITT Tech degrees still valid? ›
Your diploma isn't worthless. As long as ITT Tech was accredited by your state at the time the diploma was issued, it's still valid. And I'm pretty sure it was accredited at the time… The company worked very hard at keeping its accreditation up to date.
Is the ITT student claim settlement real? ›
In November 2018, the Bankruptcy Court approved a class action settlement for students who attended ITT from 2005 until it closed in 2016. You are a member of that class.
Is ITT Tech settlement real? ›
“Using a private lending scheme, ITT Tech saddled students with massive debt, exorbitant interest rates, and a worthless diploma. Today's settlement removes the financial handcuffs gripping thousands of California students defrauded by ITT Tech.
Contact the debt collector or loan servicer to see if it will offer a compromise or settlement. Gather documents that verify a financial hardship, such as bank statements, tax returns and pay stubs. Consider discussing your situation with an attorney who specializes in student loans.
Can I make a settlement offer on student loans? ›
Absolutely. But before you begin negotiating, your loans will probably need to be either in default or near default. Some lenders may suggest an alternative repayment plan, but if your loans are far beyond hardship assistance, you can start trying to negotiate a student loan settlement.
Are student loan settlements taxable? ›
According to the IRS, student loan amounts forgiven under PSLF are not considered income for tax purposes. Learn more about the PSLF process. You won't be taxed by the federal government, but your state may tax you. Any debt forgiven as a result of PSLF won't create a federal tax liability for you.
Do you get a refund if your student loans are discharged? ›
For certain types of loan discharge, you may also receive a refund of some or all of the payments you made on the loan, and any adverse information related to your delinquency or default on the loan may be deleted from your credit record.
What schools defrauded student loans? ›
More than 1 million defrauded borrowers attended for-profit or formally for-profit schools such as Westwood College, DeVry University, Corinthian College, Ashford University, CollegeAmerica, and ITT Tech, to name a few.
How will I know if my student loans are forgiven? ›
Your student loan servicer(s) will notify you directly after your forgiveness is processed. Make sure to keep your contact information up to date on StudentAid.gov and with your servicer(s). If you haven't yet qualified for forgiveness, you'll be able to see your exact payment counts in the future.
How will I know if my student loan will be forgiven? ›
Your loans should automatically qualify for forgiveness after you've spent 20 or 25 years in repayment. Reach out to your loan servicer about any steps you may need to take.
Which student loans are automatically forgiven? ›
Borrowers with undergraduate debt would qualify for forgiveness if they entered repayment 20 years ago or more, and borrowers with graduate school debt would qualify for forgiveness if they entered repayment 25 years ago or more. Cancel student debt for borrowers previously enrolled in low-financial-value programs.
Are all student loans eventually forgiven? ›
If you repay your loans under an IDR plan, any remaining balance on your student loans will be forgiven after you make a certain number of payments over 20 or 25 years. Past periods of repayment, deferment, and forbearance might now count toward IDR forgiveness because of the payment count adjustment.
How do I know if my school loan can be forgiven? ›
If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.
