The US Education Department announces plans for new student debt forgiveness

The U.S. Department of Education announced in a press release on Tuesday, that it intended to forgive all federal student loans that 208,000 borrowers received for attending ITT Technical Institute between January 1, 2005, and September 1, 2016.

The Department said that it will forgive 208,000 borrowers' federal student loans totaling almost $4 billion after they were scammed by a well-known for-profit university.

According to a department official, Tuesday's announcement is the second-largest debt relief initiative for debtors who have been scammed under the Biden administration. Only the $5.8 billion debt cancellation for 560,000 students who graduated from the now-defunct Corinthian Colleges, which was disclosed in June, comes close to matching it.

Including $13 billion for borrowers who were misled, this puts the total amount of loan relief offered by the Biden administration to an approximated $32 billion.

The department also disclosed that it has formally informed DeVry University, a private for-profit university that it must pay millions of dollars for accepted borrower defense applications. This is part of the department's wider efforts to provide targeted loan relief to defenseless and deceived borrowers.

A hundred or so Kaplan Career Institute participants also had their discharges authorized. The Massachusetts Attorney General gave the Education Department proof that Kaplan had falsely claimed that its employability rate was higher than 70% when it was actually as low as 25%. The Massachusetts Attorney General also discovered that Kaplan failed to give borrowers the promised career services.

The Education Department's announcement followed findings based on internal ITT policies and records, testimony from ex - students, staff, and administrators, ITT recruitment materials and brochures, investigative documents and filings collected by congressional investigators and state offices of attorneys general, among other sources.

“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” Education Secretary 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 cause.”

All remaining students who attended the long-gone ITT Technical Institute between January 1, 2005, and its demise in September 2016, including those who have not filed a borrower defense claim, will have all of their loans forgiven in full.

The Biden-Harris Administration had already taken action against ITT. This is not the first time they have done so. ITT had already come into the spotlight due to borrower advocacy allegations that the for-profit institution lied about the associate degree in nursing's programmatic accreditation as well as the ability of its students to gain a job or move credits to other institutions.

In an effort to defend ITT borrowers, the Consumer Financial Protection Bureau (CFPB) also cancelled $498 million in private student loans. ITT was sued by the CFPB in 2014 on the grounds that it had coerced students into obtaining expensive private loans when it knew the majority of them couldn't afford to pay back.

Kevin Modany, the former CEO of ITT, and Daniel Fitzpatrick, the former CFO, agreed to compensate $200,000 and $100,000, respectively, in a settlement agreement with the Securities and Exchange Commission in 2018 for allegedly misleading investors, according to CNBC Make It.