It’s a drop in the bucket of the $1.6 trillion in outstanding student loan debt, but students who borrowed money to attend the now-defunct ITT Technical Institute got some relief on Friday.
The U.S. Department of Education said those who attended the school but never received a degree are getting their remaining student debt forgiven.
After a new review of the issues that led to ITT Tech closing its doors, the agency announced that it will make $1.1 billion in closed school discharges available to an additional 115,000 borrowers -- 43% who are believed to be in default. The only stipulation those borrowers have to face is that they did not complete their degree or credential and left ITT Tech on or after March 31, 2008.
Friday’s action brings the total amount of loan discharges approved by the Department since January 2021 to $9.5 billion -- a welcome relief to more than 563,000 student loan borrowers.
"For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school," said U.S. Secretary of Education Miguel Cardona.
"Today's action continues the Department's efforts to improve and use its targeted loan relief authorities to deliver meaningful help to student borrowers. At the same time, the continued cost of addressing the wrongdoing of ITT and other predatory institutions yet again highlights the need for stronger and faster accountability throughout the federal financial aid system."
Steps former ITT Tech students need to take
According to Education Department regulations, former ITT Tech students who have outstanding student loans need to know the following:
They are eligible for loan relief if they attended an ITT-owned institution that shut down between November 1, 2013, and July 1, 2020.
If they meet the above requirement and did not enroll in another institution within three years of their school closing down, they will receive an automatic loan release.
Borrowers who enrolled elsewhere but did not complete their program of study may still be eligible for a discharge, but they will need to submit an application.
Borrowers can access the closed school discharge application by contacting their servicer or visiting StudentAid gov/closedschoolform and returning a completed application to their servicer.
The Department will begin processing discharges in September 2021, and borrowers will start receiving automatic discharges soon thereafter.