Well, well, well. Another school’s shady student loan practices are coming to light.This time it’s ITT Tech.
The U.S. Department of Education just announced it will cancel $3.9 billion worth of federal student loan debt for those who attended ITT Technical Institute.1 This will affect about 208,000 borrowers who were defrauded by ITT Tech since 2005.
Want to know if your student loans will be forgiven? Curious about what this means for student loan forgiveness overall? Keep reading to find out exactly what went down with ITT Tech and who qualifies for this round of student loan cancellation.
What Happened With ITT Tech?
ITT Technical Institute was a chain of for-profit technical schools that closed in 2016. You may remember their commercials: “You can’t get the jobs of tomorrow until you get the skills of today.” But it turns out, their slogan should’ve been more like: “We can’t promise you’ll get a useful degree or even a job, but we’re going to trick you into taking out a bunch of student loans anyway.” (That one’s not quite as catchy, though.)
Ready to get rid of your student loans once and for all? Get our guide.
After receiving thousands of borrower defense applications from former ITT students claiming the school defrauded them, the Department of Education started looking into ITT Tech’s recruitment and loan practices, which turned out to be fishier than a tuna fish sandwich.
They found that ITT Tech “engaged in widespread and pervasive misrepresentations” in order to convince students to attend their schools.2 In other words, they were lying to students to boost their numbers—not only about the educational quality of their programs and accreditations, but also about the students’ ability to transfer credits and get a job after graduation. All the while, ITT Tech was pushing people to take out student loans with the promise it would pay off in the end, when they knew that wasn’t true.
“The evidence shows that for years, ITT’s leaders intentionally misled students about the quality of their programs in order to profit off federal student loan programs, with no regard for the hardship this would cause,” said U.S. Secretary of Education Miguel Cardona.3
This led the Department of Education to cancel any remaining federal student loans—a whopping $3.9 billion worth—for those who attended ITT Tech since 2005.
But this isn’t the first time ITT Tech has had to answer for their dishonesty. In 2014, the Consumer Financial Protection Bureau (CFPB) sued ITT because they “pressured [their] students into taking out high-cost private loans even though ITT knew most of its students would ultimately default.”4 This resulted in $498 million in private student loans being cancelled. And with this most recent cancellation, borrowers will finally be free of any federal student loans they took out to attend ITT Tech as well.
Whose Student Loans Will Be Cancelled?
Any federal student loans that were taken out specifically to attend ITT Tech from January 2005 until the school closed in September 2016 will be forgiven. This means about 208,000 borrowers will have their student loans cancelled.
If you are one of the 208,000, you don’t have to do anything to have your loans forgiven. Your remaining loans will be discharged automatically, even if you haven’t applied for borrower defense. If you have any questions about whether or not your loans qualify, you can contact your loan servicer or log in to your federal student loan account.
What Does This Mean for Student Loan Forgiveness?
Along with the ITT Tech news, the Department of Education demanded that DeVry University pay nearly $24 million because of borrower defense claims that they misled students. The Department of Education also approved student loan discharges for similar reasons for those who attended Kaplan Career Institute.5 These cancellations come only months after the $1.85 billion Navient student loan settlement and the $5.8 billion student loan discharge for those who attended Corinthian Colleges.6
So, does this mean everyone's student loans will be forgiven? Not quite.
Full cancellations like the ITT Tech case have only been possible because of something called borrower defense to loan repayment under the current federal student loan forgiveness programs. And while more and more lenders are getting called out for being crooked, this kind of forgiveness is targeted toward specific schools or borrowers.
And yes, Biden also announced his plan to cancel up to $20,000 of student loan debt for many borrowers. But when you compare that to the nearly $1.6 trillion (that’s trillion with a T) of federal student loan debt drowning 43 million Americans, the student loan problem is far from over.7,8
Bottom line: You can’t count on the government (or anyone else) to make your debt go away.
How to Get Rid of Your Student Loans
So, what do you do if your student loans haven’t been forgiven?
If student loan debt is weighing you down, we’ve got some good news: You don’t have to carry it around forever. Here are some things you can do right now to get rid of your student loans for good.
Use our Student Loan Payoff Calculator.
It might seem like the only way you’ll ever get some relief is if your student loans are forgiven. But that’s a lot of trust to put in something that isn’t guaranteed. And you actually have way more power than you think. You can pay off your student loans—faster than your lender would have you believe. Sound too good to be true? Use our Student Loan Payoff Calculator to find out exactly how soon you can knock out your student loan debt (and how much you can save in interest)!
Get on a budget.
You can’t make progress on your student loans or any other financial goal if you don’t know where your money is going. But a budget solves that problem! By making a plan for your money every month, you’ll see you can pay your student loan payment and pay off your debt faster. A budget gives you control and confidence—no matter how much student loan debt you have. Start budgeting for free with EveryDollar!
Use the debt snowball method.
The best way to pay off your student loan debt isn’t by waiting on the government to save the day—it’s with the debt snowball method. Here’s how it works: You list out your debts from smallest to largest (regardless of interest rate) and make minimum payments on all of them except the smallest one. What do you do with your smallest debt? You attack it! You use whatever extra money you can get by trimming your budget or taking on a side hustle, and you throw it all at your debt. With that kind of intensity and momentum, you can crush that smallest debt in no time. Then, take the money you were putting toward that debt and throw it at your next-smallest debt. Repeat the process until you’re debt-free!
Here's the deal: You’re going to continue to hear a lot of talk around student loan forgiveness—after all, this is a huge problem that millions want gone. But you don’t have to rely on the White House to save the day. You can take control of your student loans right now. Because the sooner you take action, the sooner you can get your life back!
Get Rid of Your Student Loans for Good
Get the truth about student loan forgiveness, explore your options, and learn how to pay off your loans fast with this free, in-depth guide.Get the Guide