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Department of Education to forgive nearly $4 billion in loans held by students who attended ITT Technical Institute

Biden Administration cancels nearly $4 billion in ITT Tech student loan debt
Biden Administration cancels nearly $4 billion in ITT Tech student loan debt 00:42

Nearly $4 billion in student loans for students who attended ITT Technical Institute will be canceled by the federal government, the U.S. Department of Education announced Tuesday.

Education officials say $3.9 billion in federal student loans held by 208,000 borrowers, including those who have not yet applied for repayment discharge, will be discharged. Borrowers who attended the for-profit college between 2005 and when it closed in 2016 will not have to take any action in order to receive the loan forgiveness.

"It is time for student borrowers to stop shouldering the burden from ITT's years of lies and false promises," U.S. Secretary of Education Miguel Cardona said in a statement. "The evidence shows that for years, ITT's leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would case."

This is the campus of ITT Technical Institute in Anaheim, Ca
This is the campus of ITT Technical Institute in Anaheim, California, Monday, March 15, 2004. Eight officials at ITT Educational Services Inc. sold more than $27 million of stock in the 17 months between the time the technical school operator learned of a California attorney general's investigation into its practices and its first disclosure of the probe to investors last week. Susan Goldman/Bloomberg via Getty Images

The Consumer Financial Protection Bureau sued ITT in 2014, alleging the college pressured students into taking out high-cost private loans even though it knew most students would ultimately default. The SEC charged ITT's parent company with fraud in 2015, and ITT shut down all its campuses in September of 2016, including 14 California campuses, half of which were in the greater Los Angeles area. ITT Tech was found to have engaged in widespread and pervasive misrepresentations about the ability of students to get a job or transfer credits, and lying about the accreditation of their associate's degree in nursing, according to the Department of Education.

Students who attended ITT Tech, but did not graduate, will also get an extension in which they can receive a closed school discharge.

The latest round of student loan forgiveness follows the approval of $1.9 billion in discharges for 130,000 students to date, DOE officials said. 

The Education Department also announced it formally notified DeVry University it would be liable for nearly $24 million in approved borrower defense claims. DeVry, which remains in operation with nine campuses in California, had also been accused by the FTC of deceiving students about their job prospects and earning potential. DeVry has 20 days to appeal the demand from the Department of Education.

The total amount of loan discharges approved under President Biden now totals nearly $32 billion. The loans that have been canceled were mostly those held by borrowers who were defrauded or are permanently disabled.

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