Student loan debt: Biden writes off another $3.9 billion for for-profit former students

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Some former ITT Tech students were already eligible for debt forgiveness, but now the department will automatically forgive all remaining federal student loan debt that the borrowers agreed to attend the school from January 1, 2005 until its closure in September 2016.

“It’s time for student borrowers to stop carrying the burden of ITT’s years of lies and false promises,” Education Secretary Miguel Cardona said in a statement Tuesday.

“Evidence shows that for years, ITT leaders intentionally misled students about the quality of their programs in order to take advantage of federal student loan programs, regardless of the hardship that would cause,” he said. added.

Who is eligible for student debt relief?

Former ITT Tech students with federal student loans are eligible for cancellation even if they have not previously applied for relief under the Department of Education’s Borrower Defense Program for repayment, which offers cancellation to those who can prove that they have been defrauded or misled by their colleges. .

Some former ITT Tech students with outstanding debts may not be eligible because they attended the school before January 2005.

It is unclear how quickly borrowers will be notified of their debt cancellation. The Department of Education must first notify the borrower’s student loans department before the cancellation is processed.

In a call with reporters Tuesday, department officials did not give an exact schedule for ITT Tech students. But some former Corinthian College students who got debt relief in June have already had their debt forgiven, federal student aid chief Richard Cordray said.

He added that eligible ITT Tech borrowers won’t have to pay anything more on their loans, even if the pandemic-related payment pause expires before they receive a full cancellation. Federal loans borrowed to attend ITT Tech will remain pending.

The Department of Education also announced on Tuesday that it has officially notified DeVry University that it is required to pay millions of dollars for previously approved student debt cancellations for approximately 1,800 of its students. DeVry University is still in operation, and the government wants to recoup the cost of the institution’s student loan cancellations. It’s hard for the government to recoup money from colleges like ITT Tech that have already closed, Cordray said.

DeVry University has received the notice and is reviewing it, according to a statement the school sent to CNN on Tuesday.

“We continue to believe that the Department is misrepresenting DeVry’s calculation and disclosure of graduate results in certain advertisements, and we disagree with the conclusions they have reached,” it read.

Biden eyes broad student debt cancellation

Biden is expected to announce by the end of August whether he will forgive student loan debt more broadly for the 43 million federal borrowers.

Top Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren, have called on Biden to write off $50,000 per borrower. But Biden has consistently pushed back on the cancellation by that much and suggested he would support writing off $10,000 per borrower, in keeping with a promise he made on the campaign trail in 2020.

So far, Biden has taken a more targeted approach to student debt relief. His administration has authorized the cancellation of nearly $32 billion so far — more than any other administration — largely for borrowers who were defrauded by their for-profit colleges and for borrowers with lifelong disabilities. .
It also temporarily expanded the Civil Service Loan Forgiveness Program that forgives debt for government employees and nonprofits after 10 years of payments, and made changes to income-based repayment plans, bringing millions of borrowers closer to forgiveness.

Biden has also repeatedly extended the pandemic-related pause on federal student loan payments. Borrower balances have effectively been frozen for more than two years, with no payments required on most federal student loans since March 2020 — when the coronavirus pandemic sent many Americans into lockdown. During this time, interest ceased to accrue and collections on defaulted debts were suspended.

The hiatus is due to expire on August 31, but Biden has yet to decide whether he will extend it again.

Americans’ attitudes toward student debt relief are sharply divided along partisan and generational lines.

A majority of Democrats in a CNN poll in May (56%) — and an even larger majority of self-styled liberals (69%) — say the government is doing too little on student loan debt, while only a third of Republicans and self-styled conservatives say the same thing.

This story has been updated with additional information.

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