Ed. Dept. Cancels $500M in Loans for Scammed Students

The Department of Education announced yesterday that is canceling the student loan debts for 18,000 individuals who were scammed by a defunct for-profit college. The total amount of the loans being forgiven is about $500 million.

The students in question attended ITT Technical Institute, which collapsed in 2016 after it was accused of using misleading data related to job placements to attract students, who were then persuaded into taking out costly student loans that they could not afford to repay once they graduated.

A number of investigations, settlements, and loan forgiveness have already occurred in the wake of ITT’s collapse, but these 18,000 accounts had not yet been dealt with. The individuals had filed claims seeking relief under the borrower defense rule, but their applications had not yet been addressed.

In a statement announcing the cancellation, Education Secretary Miguel Cardona noted that other students who attended for-profit institutions, like Corinthian College, are still waiting for word on their forgiveness applications, leading some to hypothesize that more cancellation announcements are on the horizon.

“Many of these borrowers have waited a long time for relief, and we need to work swiftly to render decisions for those whose claims are still pending,” Cardona said in a statement. “This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again.”

Student loan debt cancellation has been a hot-button topic for the Biden administration dating back to when he was running for president last year. Many have called on the president to cancel some or all of students’ outstanding loans, while others have claimed that doing so will not have the benefits that people think it will.

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