Federal Government Forgives New Batch of Student Loans

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The Education Department said this week it's forgiving another batch of student loans held by people who were taken advantage of by their school—this time $500 million in debt owed by former students of ITT Technical Institute.

The 18,000 affected borrowers will officially receive word from the Education Department (ED) in the coming weeks that their loan balances will be erased completely, the department said in a statement Wednesday. The students qualify for loan forgiveness under an ED provision called borrower defense, which allows for borrowers who have been misled by their school to receive partial or full relief from their student loans. ITT Tech misrepresented how much the students could expect to earn and the jobs they could get after attending the school, as well as how easy it would be to transfer credits earned at ITT to other institutions, according to the department.

This week’s action is the second in a series of moves promised by new ED secretary Miguel Cardona, who has said he wants to take a more generous stance toward easing student loan debt, particularly in borrower defense cases. Cardona has moved away from policies set by his predecessor, Betsy DeVos, who under then-President Donald Trump enacted a stricter formula for judging the amount of forgiveness claims could receive. Borrower defense has existed since the 1990s but was rarely used until former President Barack Obama’s administration expanded the existing rules in 2016, after the closure of for-profit Corinthian Colleges caused an influx of claims.

About 90,000 borrowers have received $1.5 billion in forgiveness through borrower defense claims since President Joe Biden took office in January. In March, ED said it would forgive $1 billion in student loans belonging to 72,000 borrowers with previously approved claims.

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