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August 27, 2021

Miller applauds DOE’s move to discharge $1.1 billion in student debt for former ITT students

Secretary Cardona extended the closed school discharge window to include an additional 115,000 borrowers 


DES MOINES -- Attorney General Tom Miller applauds the U.S. Department of Education's announcement Thursday that it will extend closed school discharges, forgiving $1.1 billion in federal student loans for more than 115,000 students who attended now-defunct for-profit college, ITT Technical Institute. 

"This action provides relief to borrowers, including Iowans, who attended ITT Tech and incurred debts for a questionable education that they could not repay nor discharge," Miller said. "We thank the Department of Education for being a  partner as our office has investigated and worked to provide relief to students defrauded by the for-profit college industry." 

The Department of Education extended the closed school discharge after a new review of the problems that led to ITT's closure.

The borrowers included in Thursday’s action did not complete their degree or credential and left ITT on or after March 31, 2008. 

Under the Higher Education Act and applicable regulations, the Secretary of Education discharges the loans of borrowers and refunds any amounts paid if the borrowers did not complete their program of study because of their school's closure. 

To be eligible for a closed school discharge, the borrower must not have completed their program or transferred their credits or hours to another school. Discharges are also available to any borrower who withdrew from the institution within a few months of its closing.

However, the Department notes, the Secretary of Education can extend this discharge period based on exceptional circumstances. 

According to the Department of Education: 

"This action extends relief to borrowers whose attendance at ITT overlapped with a period during which the institution engaged in widespread misrepresentations about the true state of its financial health and misled students into taking out unaffordable private loans that were allegedly portrayed as grant aid. 

“ITT's malfeasance drove its financial resources away from educating students in order to keep the school in business for years longer than it likely would otherwise have, resulting in debts that are being discharged starting today."

Borrowers covered by the extension will begin receiving automatic discharges in coming weeks. The action applies to borrowers with loans from the William D. Ford Federal Direct Loan Program, the Federal Family Education Loan Program, and the Federal Perkins Loan Program.

This is just the latest action related to discharge of student loans taken out by those who attended ITT Technical Institute.  

In June, the Department of Education approved 18,000 borrower defense-to-repayment claims for individuals who attended ITT Technical Institute following a multistate investigation into the defunct educator led by the Iowa Attorney General’s office.  

In September 2020, the AG’s office secured an agreement to obtain $1.3 million in debt relief for former ITT Tech students in Iowa as part of a settlement involving 48 attorneys general and the federal Consumer Financial Protection Bureau. That settlement was with PEAKS Trust, a private loan program run by the for-profit school and affiliated with Deutsche Bank entities.  

In June 2019, Attorney General Miller was part of a $168 million settlement that resulted in debt relief for 18,664 former ITT students. That agreement was with Student CU Connect CUSO, LLC, which also offered loans to finance students’ tuition at ITT Tech. 

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