Loan relief granted to defrauded for-profit college students – Honolulu, Hawaii

Honolulu, Hawaii 2021-06-16 13:00:00 –

The U.S. Department of Education said today that it has wiped out student debt to thousands of borrowers who attended a for-profit university chain that exaggeratedly claimed graduates’ successful employment.

The Biden administration said it would approve 18,000 loan exemption claims from former students of the ITT Institute of Technology, a chain that closed in 2016, after receiving a series of sanctions from the Obama administration. Repayment of the new loan will eliminate more than $ 500 million in debt.

The move marks a step in the Biden administration’s efforts to clear the outstanding claims of the Borrower Defense Program, which provides loan forgiveness to students fooled by college. Claims piled up during the Trump administration, stagnating the program and only began processing claims after federal court demanded it. Currently, there are over 100,000 pending complaints.

In announcing the new action, Secretary of Education Miguel Cardona vowed to continue standing for students deceived by the school.

“Our actions today will give thousands of borrowers a new start and the peace of mind they deserve,” Cardona said in a statement. “Many of these borrowers have been waiting for relief for a long time. We need to work swiftly to make a decision for those whose claims are still pending.”

This follows the cancellation of another loan in March, when the Ministry of Education liquidated $ 1 billion in federal student debt to 72,000 borrowers. All of these claims came from a former student at a for-profit university.

Borrower supporters praised the new approval, but sought prompt relief for thousands of other students whose claims were still pending, including many students who attended ITT Tech.

Alex Elson, Vice President of Student Defense, Washington’s Legal Group, said: “But it further confuses that they are very hesitant to use their authority to help the myriad of additional borrowers still waiting instantly and automatically.”

Borrower defense is one of several educational programs that are subject to overhaul by the Biden administration because it serves to reverse the policies of the Trump era. Cardona is hosting a series of hearings this month as his agency is considering its policies and other changes.

The program was rarely used until 2015, when the Ministry of Education received thousands of claims from former Corinthian students. The for-profit university chain was recently closed following the discovery that it lied to students about employment rates.

Following the collapse of Corinthian and other for-profit colleges in need, the Obama administration has moved to make it easier for students to get rid of their loans. However, the overhaul was canceled by the Trump administration. The Trump administration later created its own rules, making it difficult to get relief. In changing the rules, then Secretary of Education Betsy DeVos said it was too easy to allow loans.

Cardona began abolishing DeVos’s rules in March, withdrawing the formula that allowed the Ministry of Education to allow students whose claims were approved to only partially cancel their loans. All borrowers given bailouts will now fully liquidate their loans.

Many of the 18,000 claims from ITT Tech were approved after the Ministry of Education discovered that the company was lying about the prospects for graduates’ jobs. The agency said it made “repeated and serious misrepresentations” of its ability to help students find employment. In fact, many students said it was difficult to find a job if they included ITT in their resume.

Other claims were approved after the department discovered that the ITT misunderstood students about their ability to transfer course credits to other universities. According to the faculty, credits are rarely accepted elsewhere, and students’ educational backgrounds are “little or no progress.”

Borrowers will be notified of the approval of their claims in the coming weeks, the agency said.

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