Nearly $4 billion worth of federal student loans will be canceled by the Department of Education because of fraud.
The ITT Technical Institute closed in September 2016 and all remaining students will have their loans canceled. The borrowers who qualify for the relief won't have to take any action to get the funds.
The education secretary said it was time for student borrowers to stop shouldering the burden from ITT. The evidence shows that ITT misled students about the quality of their programs in order to make more money off of federal student loan programs.
ITT's former chief executive, Kevin Modany, and former CFO, Daniel Fitzpatrick, agreed to pay $200,000 and $100,000, respectively, as part of a settlement with the Securities and Exchange Commission for allegedly deceiving investors.
The Biden administration approved debt relief for 130,000 borrowers who attended ITT because they were misled about their job prospects, ability to transfer credits to other schools and accreditation of their associate degree in nursing.
The $5.8 billion cancellation of loans for 560,000 students at Corinthian Colleges was the second largest debt relief action by the Biden administration.
There is an estimated $32 billion in loan relief provided by the administration.
As part of its larger efforts to provide targeted loan relief to vulnerable and defrauded borrowers, the department has notified DeVry University that it has to pay millions of dollars for approved borrower defense applications.
A DeVry university spokesman told CNBC that the university leadership was aware of the announcement and were reviewing it.
Predating DeVry's establishment as an independent institution with a new board and leadership, the student claims are from 2008 and 2015. The Department mischaracterizes DeVry's calculation and disclosure of graduate outcomes in certain advertising and we do not agree with their conclusions.
The news comes just two weeks before the department's pause on student loan repayment, interest and collections, which was first enacted in March 2020, is set to expire.
President Joe Biden will make a decision on federal student loan forgiveness at the end of August, Jean-Pierre confirmed.
According to CNBC, the administration is considering wiping out $10,000 for all borrowers who earn less than $150,000 per year.
According to a memo obtained by Politico, most borrowers would need to apply for the program on StudentAid.gov by self-certifying that they meet the criteria for relief, but millions of borrowers would receive debt relief automatically.
The review of broad based debt cancellation is still ongoing and no decisions have been made, according to an Education Department spokesman. CNBC made a request for comment from the department, but they did not reply immediately.
You can check it out.
The student loan forgiveness decision will be made before August 31, according to the Biden administration.
The 30-year-old artist paid off his student loans using the TikTok app.
There are 7 companies that help employees pay off their loans.
You can get smarter about your money and career by signing up for our weekly newsletter.
All Rights Reserved © 2024
