Feds to discharge $3.9B in ITT student loans, seek $24M repayment from DeVry
Higher Ed Dive
August 16, 2022
The U.S. Department of Education will discharge all outstanding federal student loans for borrowers who attended ITT Technical Institute over nearly 12 years before the for-profit chain’s 2016 closure, wiping out $3.9 billion in debt for 208,000 people, officials said Tuesday.
Separately, the Education Department on Monday formally notified DeVry University — a for-profit institution that is still operating — that the agency wants it to pay almost $24 million to cover the cost of loans dismissed for students who enrolled there from 2008 through 2015. The department dismissed the loans under borrower defense to repayment, a debt-forgiveness program for students whose institutions misled them. It could seek additional money from DeVry as it processes more borrower defense applications, but the university can dispute the repayments.
The Education Department also approved discharges for almost 100 borrowers who enrolled in a medical assistants, billers and coders program at a long-shuttered Kaplan Career Institute in Kenmore Square, Massachusetts, in 2011 and 2012. The step comes after the state’s attorney general found the for-profit institution used deceptive practices including lying about its job-placement rates.
Actions announced Tuesday are the latest in a complex set of steps the Biden administration has pursued to shore up the country’s troubled student loan system. They include proposed regulatory changes as well as attempts to clear out a backlog of borrowers seeking loan forgiveness under several programs.
Officials are also casting the efforts as holding bad actors accountable, particularly for-profit colleges and career schools.
“Most colleges and universities are honest,” Education Secretary Miguel Cardona said in a conference call Tuesday. “They are honest about the quality of education that they provide. But, as we’ve seen today, that’s not always the case.”
Another federal agency, the Consumer Financial Protection Bureau, has been involved in efforts targeting colleges deemed problematic. The CFPB’s director, Rohit Chopra, said during Tuesday’s call that it will push to examine private and institutional student lending.
“We hope that ongoing oversight will prevent further abuses like those found with ITT Tech, where students were subjected to high interest rates and illegal debt collection practices,” Chopra said.