The Department of Education is canceling the debt of student loans for 18,000 alumni of the now-defunct for-profit college, ITT Tech. The institute defrauded the former students by exaggerating how much they could earn after graduating and misled them about the transfer of credits. The move is a step up for the Biden administration in addressing a backlog of over 100,000 forgiveness claims left over from Trump’s tenure.
After the government withdrew its federal funding, IIT Tech shut down in 2017. The cancellation announcement comes in light of a statement made by the Biden administration three months ago. They stated their commitment to canceling $1 billion in student loan debt for 73,000 defrauded students. Although these students were deemed eligible for the relief, former Education Secretary Betsy DeVos revised the cancellation calculation, and hence, they received only partial loan forgiveness.
The policy referred to as Borrower’s Defense enables students defrauded by their college to seek debt relief. It was during the Obama administration that this forgiveness procedure was simplified. Through the Trump administration, the changes made by DeVos put the rule in limbo. Zero applications were processed for fifteen months between 2018 and 2019; the number of pending applications even rose to over 200,000 at one point.
Under present Education Secretary Miguel Cardona, DeVos’ revisions have been reversed. Cardona also stated the need to work swiftly on pending claims as borrowers have waited a long time for relief.
For some leaders of the Democratic Party like Elizabeth Warren and Chuck Schumer, Biden needs to work more on student debt forgiveness. Schumer and Warren have rallied for a broad cancellation of $50,000 per borrower. Biden, on the other hand, stated he would support a move by Congress to cancel $10,000 per borrower. The President has also ordered Cardona to write a memo on the president’s legal authorities to waive off student debt.