Biden's Education Dept. just wiped out $1.1 billion in student debt for 115,000 defrauded borrowers

college graduates student loans — Hero Images / Getty Images

The Education Dept. announced 115,000 former ITT Tech students will get $1.1 billion in student-debt relief.
ITT Tech shut down in 2016 over investigations that revealed predatory and misleading practices.
This came after the department simplified the process for defrauded borrowers to get relief.
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Some former students of ITT Technical Institute, a for-profit college that shut down in 2016 over investigations that revealed predatory practices and fraud, will now get student-debt relief.

On Thursday, the Education Department announced in a press release that 115,000 additional borrowers who attended ITT will receive over $1.1 billion in relief. Eligible borrowers did not complete their degree and left ITT on or after March 31, 2008, a period during which the school "engaged in widespread misrepresentations about the true state of its financial health and misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid," according to the release.

"Today's action continues the Department's efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers," Education Secretary Miguel Cardona said in a statement. "At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system."

Under the Higher Education Act, the Education Secretary can provide loan relief within months of a school's closure, but the secretary also has the authority to extend that window. According to the press release, Cardona chose to extend that window over investigations that displayed ITT's predatory nature.

The Education Department will begin processing discharges in September, and eligible borrowers will get automatic relief unless they enrolled in another school within three years of ITT's closure.

Typically, if defrauded borrowers want student-debt relief, they need to submit a borrower defense claim proving the school they attended committed fraud. Under President Donald Trump's administration, though, getting relief was nearly impossible due to a flawed methodology Education Secretary Betsy DeVos implemented, in which 99.4% of defrauded borrowers who applied for relief were denied.

A series of for-profit schools have closed down over the past decade over accusations of misleading students and pushing them to take out loans they cannot pay off, and Biden's administration is working to reform the claims process and give those borrowers the relief they deserve.

In March, Cardona waived DeVos' methodology, and on Tuesday, the Education Department confirmed it would not be creating a new process to determine debt relief, and instead, will presume all defrauded borrowers with approved claims are entitled to full student debt relief unless evidence suggests otherwise.

And on June 16, Cardona cancelled student debt for 18,000 borrowers defrauded by ITT, totaling to about $500 million in debt relief.

Today's action brings the total amount of student-debt relief under Biden to $9.5 billion for over 563,000 borrowers.

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