President Biden announced on Wednesday that The Department of Education is cancelling $500 million in student loan debt for 18,000 former ITT Tech students defrauded by the now closed for-profit college. This is another step that the Biden Administration has taken to address a backlog of more than 100,000 forgiveness claims in the United States. As of yesterday, Biden has cancelled more than $2.8 billion dollars of student loans.
Students who attended ITT Technical Institute and made claims against the school for misrepresentation or deceit will receive 100% loan discharges.
This latest round of student loan forgiveness is made possible by provisions in the law that allows borrowers with federal student loans to ask for debt forgiveness if their schools took part in deceptive or illegal activity, or abruptly went out of business. In the ITT Tech case, officials found that the school misrepresented how much students could expect to earn, and the types of jobs they could land upon graduation.
While the student debt forgiveness is viewed as a step in the right direction for many, some leaders in the Democratic Party — including Senate Majority Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren — are calling for the cancellation of $50,000 per borrower across the board. Biden has resisted so far, but has said he would support a move by Congress to cancel $10,000 per borrower.
A COVID-19 pandemic-related suspension of federal student loan payments, extended by President Biden earlier this year, is in place until October 2021.
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