Students have received only a fraction of the relief they are entitled, records show
DES MOINES — Attorney General Tom Miller joined a multistate effort calling on the U.S. Department of Education to immediately forgive the loans of former ITT Tech students who attended the bankrupt for-profit school when it closed.
The letter, joined by a total of 22 attorneys general, was sent to Federal Student Aid Chief Operating Officer Mark Brown and questions whether the department has complied with federal regulations that require the department to automatically discharge the loans of borrowers enrolled at closed schools who do not continue their education elsewhere.
“Unfortunately, school closures often leave students worse off than when they enrolled — stuck with debt, no diploma, and without enhanced career prospects,” the letter states. “For these borrowers and their families, discharge of federal loans is extremely important.”
The attorneys general note that in May 2019, the department estimated that approximately 52,000 former ITT students are eligible for nearly $833 million in closed-school discharge relief. However, recent information obtained from Congress indicates that automatic closed-school discharges have only been granted to more than 7,000 former ITT student borrowers — amounting to less than $95 million in relief. Today’s letter calls on the department to clarify whether all eligible ITT students are now receiving the automatic discharges to which they are entitled.
ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the Department of Education to restrict ITT’s access to federal student aid. ITT had operated campuses in Des Moines and Cedar Rapids.
Federal law requires the department to automatically forgive the student loans of students attending within 120 days of a school’s closing for students who did not obtain their degree and have not transferred credits into the same program at another school. The attorneys general have asked that the 120-day window be expanded “due to the deeply compromised nature of the school and its offerings in the months before its national collapse.”
The letter also asks for details about the number of students whose loans were discharged and the methodology the department is using to implement the automatic closed school discharge.
In June, Miller secured an agreement to obtain $1,358,754.40 in debt relief for 143 former ITT Tech students in Iowa as part of a 44-state settlement. Nationally, the settlement will result in debt relief of more than $168 million for 18,664 former ITT students.
The settlement was with Student CU Connect CUSO, LLC, a credit union service organization that offered loans to finance students’ tuition at ITT Tech.
“Iowans who attended ITT Tech incurred debts for a questionable education that they could not repay nor discharge,” Miller said.
In addition to Miller, today’s letter is signed by the attorneys general of California, Colorado, Connecticut, Delaware, Illinois, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, and Washington.