NAICU Washington Update

New Category of Borrower Defense Claims Approved

July 01, 2021

During an investigation into ITT Technical Institute (ITT), it was determined that between 2005 and the institution’s closure in 2016, ITT made repeated misrepresentations to students about how much they could expect to earn and the jobs they could obtain after graduation.  As a result, the Department of Education announced the approval of two new categories of borrower defense claims in order to provide approximately $500 million in relief for students who attended ITT.
The two new categories are likely employment prospects and the ability to transfer credits. Approximately 18,000 borrower defense claims were approved under these two new categories and these borrowers will receive 100 percent loan discharges.
The recent findings expand relief to all ITT students, whereas previously only students who attended ITT in California had received relief as the result of a 2004 lawsuit in that state.  In addition, the Department found that between January 2007 and October 2014, credits at ITT were rarely transferred to other institutions.  This resulted in borrowers having student loan debt but no ability to transfer to complete their degrees.
The Department will begin notifying borrowers of their approvals in the coming weeks, and will work expeditiously to discharge their approximately $500 million loan balances.
This brings total loan cancellation under borrower defense by the Biden Administration to $1.5 billion for approximately 90,000 borrowers.

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