The agency said the school misled students about their ability to get jobs and transfer credits
Roughly 208,000 student loan borrowers who attended a now-defunct for-profit college chain will have $3.9 billion in federal student debt discharged, the Department of Education announced Tuesday.
“Students emerged from their time with ITT having made little to no progress on their educational journey and they were saddled with debt that they couldn’t escape, until now,” he said. “Less discussed was the same subprime-style lending practices that were purported by some of the nation’s largest chains of for-profit colleges,” said Chopra, who served as the CFPB’s student loan ombudsman from 2011 to 2015. “Repeatedly we saw those companies engaged in widespread deception and fraud,” and use “complex loan arrangements that allowed them to harvest profits even as they set up borrowers to fail.
The collaboration between the Department of Education, the CFPB and state attorneys general turned up evidence that school representatives misled students about their ability to get a job or transfer their credits to another school, the Department said. The findings were based on internal records as well as information from borrowers and ITT managers and recruiters.
On the books since the 1990s, but rarely used until recently Since the 1990s, student loan borrowers have had the right to have their federal debt wiped away in cases where they were misled by their schools, but they rarely took advantage of it for decades. Following the collapse of Corinthian Colleges in 2015 and ITT Tech in 2016, borrowers, organized by activists, submitted borrower defense claims in droves.
‘Difficult to get money back from a closed institution’ Student Defense as well as other advocates and lawmakers have pushed the Department of Education to hold executives and institutions liable for the losses to taxpayers when federal student debt is discharged because of schools’ alleged wrongdoing.
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