Related Topics in the Ref Desk: Discharge, cancellation, forgiveness
By Owen Daugherty, NASFAA Staff Reporter
The Department of Education (ED) announced an additional 18,000 borrower defense to repayment claims for individuals who attended ITT Technical Institute, the closed for-profit college chain, will be approved, providing borrowers with complete loan discharges totaling roughly $500 million in relief.
ED noted in a release that the newly approved claims bring the total borrower defense cases approved under the Biden administration to $1.5 billion for about 90,000 borrowers. Borrowers whose claims were approved will be notified by ED in the coming weeks and the department will work swiftly to discharge the loan balances, the release stated.
“Our action today will give thousands of borrowers a fresh start and the relief they deserve after ITT repeatedly lied to them,” Education Secretary Miguel Cardona said in a release announcing the move. “Today’s action is part of the Biden-Harris Administration’s continued commitment to stand up for borrowers when their institutions take advantage of them.”
Cardona noted the relief for the borrowers is a long time coming after many applications for relief were either slow-walked or outright denied by the Trump administration under former Education Secretary Betsy DeVos.
“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. This work also emphasizes the need for ongoing accountability so that institutions will never be able to commit this kind of widespread deception again,” Cardona added.
The borrower defense claims approved this week were done so based on two criteria for borrowers who submitted applications seeking relief: the likelihood of employment prospects and the ability to transfer credits. This is the first approval of a new category of borrower defense claims by ED since January 2017, the release noted.
Regarding claims citing diminished employment prospects, ED is expanding findings that it had previously made only for students who attended ITT in California. ED will now cover borrowers regardless of where they attended.
ED said it was expanding the relief to all borrowers due to evidence that found ITT “made repeated and significant misrepresentations to students related to how much they could expect to earn and the jobs they could obtain after graduation between 2005 and the institution’s closure in 2016.”
In fact, borrowers consistently stated that including ITT attendance on their resumes made it more difficult for them to find a job, and that their job prospects were not improved by attending ITT, ED added.
Further, ED found that ITT for several years misled its students about their ability to transfer credits to other institutions. ED stated that it found students’ credits were rarely able to transfer to other institutions and borrowers made little to no progress in their postsecondary education despite taking on student loan debt to attend ITT.
Notably, ED said the findings and subsequent relief provided was made possible due to evidence provided by partners at the Consumer Financial Protection Bureau (CFPB) and the Iowa Office of the Attorney General, as well as Veterans Education Success. Richard Cordray, the newly appointed Chief Operating Officer at the Office of Federal Student Aid (FSA), previously served as the director of CFPB.
ED “looks forward to continuing to work with these organizations and others whenever schools engage in conduct that harms borrowers,” the release added.
The move is the latest by ED to provide targeted relief to borrowers who were defrauded by their institutions. The department in March announced it would provide full debt relief for borrowers whose claims were previously approved but only given partial or no relief. ED also said at the time it will be pursuing a “re-regulation” of borrower defense in the future, starting with public negotiated rulemaking hearings next week.
Publication Date: 6/16/2021