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The Education Department announced Tuesday that a total of $3.9 billion in student debt will be forgiven for all former ITT Technical Institute students.
The department will also initiate a process to hold DeVry University, a for-profit that was found to falsely advertise job-placement rates, accountable to recoup $24 million to the department for borrower-defense claims.
“In recent years too many for-profit colleges and career schools have been caught defrauding and deceiving their students. Their entire business model relies on driving students into debt,” said Education Secretary Miguel Cardona. “Years of investigation have indicated that ITT Technical Institute was among the worst offenders.”
So far the Biden administration has discharged $32 billion for nearly 1.6 million borrowers who say they were defrauded by their colleges. Tuesday’s announcement will also be the first time the department initiates a process to recoup funding from a college with approved borrower-defense claims that are still open.
A total of 208,000 former ITT students who were enrolled after 2005 will have their debts automatically forgiven, even if students have not yet applied for borrower defense. The department was not able to provide a specific time frame of when the debts will be discharged.
ITT, a for-profit college chain, closed its 130 campuses in 2016 after several investigations and lawsuits pertaining to misleading students about employment prospects and the ability to transfer credits to other colleges.
Tasha Berkhalter, a former ITT student and veteran who had a borrower-defense claim approved in 2021, said, “I chose the school because they had advertised its high-tech criminal justice program. Their initial staff told me that the GI Bill would cover my full tuition.” She continued, “ITT Tech was not a high-tech school at all. The GI Bill did not fully cover my tuition, and I was forced to take federal and personal student loans on top of my GI Bill money.”
In June 2021, the department approved 18,000 borrower defense claims for former ITT students.
“This action represents another milestone in the years-long effort to achieve justice for student borrowers whose institutions defrauded them and taxpayers. By automating the remaining discharges of ITT borrowers, the Education Department will ensure all of ITT’s victims will, at last, realize greater financial security after years of uncertainty and waiting,” said Sameer Gadkaree, president of the Institute for College Access and Success.
The department will also begin a process that could hold DeVry University, a for-profit with 40 locations that are still open, liable to pay $24 million to the Education Department to cover the cost of borrower-defense discharges that were approved for former DeVry students in February. Borrower-defense claims for 1,800 former DeVry students totaling $71.7 million were approved by the department after the department found that the for-profit chain was advertising false job-placement rates.
The department has notified DeVry that the process to recoup the funding has been initiated, and DeVry will have 20 days to respond or request a hearing.
In response to an email from Inside Higher Ed, a DeVry spokesperson said, “DeVry University remains deeply committed to student success and preparing students to thrive in careers shaped by continuous technological change. Our alumni get significant value from their degrees and work at some of the most respected businesses and organizations in the nation.”
They continued, “It is worth reiterating that those student claims date back to advertising that was used between 2008 and 2015, predating DeVry’s establishment as an independent institution with a new board and leadership. The Department of Education’s announcement was anticipated based on the February news release. We are in receipt of the notice from the department and are reviewing it. We continue to believe the department mischaracterizes DeVry’s calculation and disclosure of graduate outcomes in certain advertising, and we do not agree with the conclusions they have reached.”
The department will not seek similar recoupment for ITT, according to a department official, because of the inherent difficulties in recouping funds from a closed institution.
