Student Debt Forgiveness? Joe Biden Might Have Just Tipped His Hand

Student Debt Forgiveness? Joe Biden Might Have Just Tipped His Hand

The Department of Education has announced the cancellation of $500 million in student loan debt for 18,000 former ITT Tech students.

 

Here's What You Need to Remember: ITT Technical Institute, a for-profit school that operated nationwide before it folded in 2016, was accused of defrauding thousands of students. Federal agents raided  ITT Tech’s headquarters in 2004, leading to class action lawsuits, and ITT Tech was eventually sued in 2014 by the Consumer Financial Protection Bureau.

President Biden has been under pressure, for the last several months, to cancel student debt.

 

Activists have asked Biden to take executive action to cancel $50,000 in federal student loans per borrower under the Higher Education Act, although Biden has asked the Education Department to perform a legal review over whether such action would be allowed.

Meanwhile, the Biden Administration has not included student debt cancellation in its proposed federal budget, nor has it included it in either of its proposed trillion-dollar spending packages, the American Jobs Plan or the American Families Plan.

“You cannot begin to address the racial wealth gap without addressing the student loan debt crisis. You just can’t address one without the other. Plain and simple,” NAACP President Derrick Johnson said in a statement earlier this month.

In the meantime, the Biden Administration has announced plans to forgive a very specific type of student debt.

Per CNN, the Department of Education has announced the cancellation of $500 million in student loan debt for 18,000 former ITT Tech students. The administration had previously announced plans to cancel $1 billion in student debt from 73,000 students who had also been defrauded.

ITT Technical Institute, a for-profit school that operated nationwide before it folded in 2016, was accused of defrauding thousands of students. Federal agents raided  ITT Tech’s headquarters in 2004, leading to class action lawsuits, and ITT Tech was eventually sued in 2014 by the Consumer Financial Protection Bureau.

“It is with profound regret that we must report that ITT Educational Services, Inc. will discontinue academic operations at all of its ITT Technical Institutes permanently after approximately 50 years of continuous service,” ITT Tech said in a press release to announce its closure in September of 2016.

“With what we believe is a complete disregard by the U.S. Department of Education for due process to the company, hundreds of thousands of current students and alumni and more than 8,000 employees will be negatively affected.”

Letters from state attorneys general, in April, had urged the federal government to make such a move, with 24 states and the District of Columbia submitting a borrower defense application in early April, requesting federal loan discharges for students enrolled at ITT Tech between 2007 and 2010.

“ITT Tech induced students to enroll in its costly programs based on deceptive earnings prospects, leaving students and their families with crushing debts they can’t afford to pay,” Maura Healey, the state attorney general in Massachusetts, said in a letter. “Borrowers across the country were swindled by this school and deserve relief. We call on the Department of Education to cancel their loans, so they no longer have to shoulder this unfair debt burden.”

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver. This article first appeared earlier this year.

Image: Reuters