The U.S. Department of Education has announced that it will discharge all federal student loans that borrowers received to attend ITT Technical Institute from January 1, 2005, through its closure in September 2016.
The education department also announced that it is working on new regulations that will improve a variety of the existing student loan forgiveness programs, significantly reduce monthly payments, and provide greater protections for students and taxpayers against unaffordable debts.
“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” said U.S. Secretary of Education Miguel Cardona 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. The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse.”
The education department also announced that it formally notified DeVry University (DeVry), that it is required to pay millions of dollars for approved borrower defense applications. DeVry can submit information and arguments for why it should not be required to pay these liabilities or request a hearing before the Department’s Office of Hearings and Appeals.
Finally, the department also announced the approval of discharges for just under 100 borrowers who enrolled in the Medical Assistant or Medical Billing & Coding Program at Kaplan Career Institute’s Kenmore Square location in Massachusetts from July 1, 2011, to February 16, 2012, when the institution stopped enrolling new students.
These are borrowers identified by Massachusetts Attorney General Maura Healey after an investigation found that the institution lied about its job placement rates to borrowers, among other deceptive practices. The location closed in February 2013.
The action brings the total amount of loan relief approved by the Biden-Harris Administration to nearly $32 billion for 1.6 million borrowers. This includes $13 billion related to institutions that took advantage of borrowers. It represents the department’s continued commitment to providing debt relief to eligible borrowers.
“ITT defrauded hundreds of thousands of students, as we identified when I was the director of the Consumer Financial Protection Bureau,” said Federal Student Aid Chief Richard Cordray. “By delivering the loan relief students deserve, we are giving them the opportunity to resume their educational journey without the unfair burden of student debt they are carrying from a dishonest institution.”
The education department’s findings around ITT were assisted by significant and extensive work by attorneys general across the country, the Consumer Financial Protection Bureau, and Veterans Education Success. The Department received important evidence from half the country’s state offices of attorneys general, led by Colorado and Oregon Attorneys General and supported by significant evidence from the Iowa and New Mexico Attorneys General.
The department’s findings are based on extensive evidence, including internal ITT policies and records; recruitment materials and brochures; recordings of interactions between ITT’s representatives and prospective students; testimony from former students, employees, and administrators; investigative files and submissions from congressional investigators and state offices of attorneys general; and the tens of thousands of individual borrower defense applications submitted by former ITT students.
“The automatic loan cancellation announced today will provide life-changing relief that has long been owed to former ITT students,” said Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB). “Far too many Americans are still on the hook for loans they acquired at colleges that profited from deceiving students, and the CFPB will continue to work with the Department of Education to address predatory student loan debt, protect students, and hold wrongdoers accountable.”
The education department formally notified DeVry that the institution is liable to the Department for nearly $24 million for approved borrower defense claims. This recoupment effort follows the Department’s announcement in February 2022 that it had approved claims after finding that, from 2008 through 2015, DeVry had repeatedly misled prospective students across the country. DeVry claimed that 90 percent of its graduates who actively seek employment obtained jobs in their field of study within six months of graduation.
In fact, the institution’s actual job placement rate was around 58 percent. DeVry inflated its job placement rate by including students who found employment prior to graduation and by excluding others who did not conduct a job search in the college’s preferred manner.
The Kaplan approval of discharges for roughly 100 borrowers was based upon the Department’s independent review of the evidence which primarily came to it in a request from the Office of the Massachusetts Attorney General.
The Massachusetts Attorney General conducted a detailed investigation into the school and provided evidence to the Department that stated that Kaplan repeatedly lied about its job placement rates to borrowers, telling them upwards of 70 percent of students got jobs, when the actual figure was as low as 25 percent.
Kaplan inflated its rates by including temporary and part-time jobs and reported students as having been placed in their field even if the school’s internal records indicated they were not. The Massachusetts Attorney General also provided evidence to the Department that Kaplan did not provide promised career services to borrowers.
The nearly $32 billion in student loan relief approved to date includes:
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