US Government cancels $500m in debt owed by 18,000 defrauded students

*The United States Department of Education has decided that the now-defunct institution misled students, and stood up for the affected learners

Isola Moses | ConsumerConnect

In ensuring justice while standing up for the students who were misled and subsequently defrauded by their schools in the United States (US), President Joe Biden’s administration has announced that it is erasing $500 million in student loan debt for 18,000 former ITT Tech students.

It was learnt the Department of Education (DoE) recently said disclosed that the school misled the affected students about how much they could expect to earn after graduating, as well as how their credits would transfer to other schools.

US President Joe Biden in the White House

Education Secretary Miguel Cardona said the action came with a promise that the Department will continue to defend students who were misled by their institutions of learning.

Cardona in a statement said: “Our action today will give thousands of borrowers a fresh start and the relief they deserve.

“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.”

Entitled to relief

In March 2021, the country’s Department of Education had announced that it would cancel $1billion in student loan debt for about 73,000 defrauded students of Corinthian Colleges and ITT Technical Institute.

Students’ Loan Debt Concept   Photo: Getty Images

An official said a review of Betsy DeVos’s guidelines dealing with student loan relief did not grant an “appropriate level of relief to borrowers”, and added that there was “clear evidence” that they had been taken advantage of.

Education Department Chairman Robert C. “Bobby” Scott (D-VA) said: “It has been more than four years since the Department of Education first concluded that these students had been cheated by their institutions and were deserving of full debt relief.

“Unfortunately, instead of simply processing loan forgiveness claims, the previous administration refused to accept the findings of its own staff, and suspended action on behalf of these defrauded borrowers.”

It is recalled the Biden administration had planned to give full debt relief to students defrauded by private, for-profit when the new administration began a rollback of the Trump-era’s stand on students defrauded by for-profit colleges.

The Department of Education said it was tossing out former Education Secretary Betsy DeVos’s guidelines dealing with student loan relief and will opt for a more streamlined approach in giving borrowers full relief.

The Department at the time stated that the first course of action would be to provide full debt relief to roughly 72,000 borrowers who were defrauded by Corinthian Colleges and ITT Technical Institute.