WASHINGTON–In a saga that at one point involved more than a half-dozen credit unions, some $3.9-billion in student loan debt being carried by former students who were defrauded by ITT Technical Institute has been cancelled by the Department of Education.
The move affects approximately 208,000 borrowers who should not have to apply for relief, according to the department.
As CUToday.info has reported, ITT Educational Services was at one point one of the largest operators of for-profit technical schools in the U.S., and shut down in 2016.
In 2019, seven credit unions that had already suffered more than $150 million in losses from loans made to students of the former ITT Technical College agreed to pay more than $7 million from a collateral account to bring the painful ordeal to a close. The credit unions owned a CUSO named CU Student Connect that in 2009 began making loans to the for-profit ITT Technical Institute. As CUToday.info reported here, in 2016, ITT’s parent, Carmel, Ind.-based based ITT Educational Services Inc., filed for bankruptcy, with the bankruptcy trustee eventually filing suit against the credit unions and one other CUSO.
‘Pervasive Misrepresentations’
The Education Department found that ITT Tech engaged in widespread and pervasive misrepresentations, including lying about students' ability to get a job or transfer credits.
"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," said U.S. Secretary of Education Miguel Cardona in a statement. "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.”
To date, the Biden-Harris administration has approved the cancellation of nearly $32 billion in student loans for 1.6 million borrowers, according to a CNBC analysis.