$26M in debt discharged for former ITT students as Biden Administration grants AG Ellison’s request
U.S. Dept. of Ed. action followed bipartisan application, investigation, years of advocacy by AG Ellison
Nationwide, $39B in debt cancelled for 208K borrowers of now-defunct school
AUGUST 16, 2022 (SAINT PAUL) — Minnesota Attorney General Keith Ellison announced today that at his request, the Biden Administration is cancelling federal debt for Minnesota students who enrolled in ITT Technical Institute between 2005 and its 2016 closure. This action by the U.S. Department of Education comes in response to an application that Attorney General Ellison and a bipartisan group of state attorneys general submitted in 2021, a multistate investigation, and other advocacy to discharge federal debt for students that ITT defrauded. The Department’s actions will cancel $26.3 million in federal student debt for 1,380 Minnesota borrowers who attended ITT. Their debt will be discharged without borrowers having to do anything.
Nationwide, the Department’s action today cancels $39 billion in debt for more than 208,000 former students of the now-defunct school.
“Minnesotans take out federal student loans in good faith to help themselves and their families get ahead — and ITT Tech took advantage of them. They operated a large, for-profit chain of schools that used aggressive, often misleading sales tactics to sign people up for programs that provided little value and buried students in debt. When ITT began to be held to account for their misdeeds and abuse of taxpayer dollars, they quickly folded — leaving students holding the bag.That was deeply wrong,” Attorney General Ellison said.
“Under the law, it’s my job as Attorney General to protect Minnesotans from fraud, and I take it seriously. That’s why last year, I applied for loan discharge for these students who were defrauded — and today, I’m grateful the Biden Administration has done as I asked. This is $26 million that Minnesotans now don’t have to worry about repaying. I hope it allows these former students to begin affording their lives again,” Attorney General Ellison continued.
Richard Cordray, Chief Operating Officer of the Department of Education Office of Federal Student Aid, recognized the work of Attorney General Ellison as part of the announcement. “Today, I am glad to announce the results of our work with Attorney General Ellison to hold ITT Technical Institute accountable for cheating so many students out of their time and money. Students who put their trust in ITT were lured by lies about their job prospects and did not get the quality education they were promised. These students now will have their remaining federal student loan debt discharged without needing to take any further action.”
Investigation found systemic fraud at ITT Tech that violated Minnesota law
The application that Attorney General Ellison filed with the Biden Administration U.S. Department of Education in April 2021, as part of a bipartisan group of 25 attorneys general, followed a multistate investigation that uncovered systemic fraud in the marketing of ITT programs. ITT encouraged prospective students to enroll and take out several thousands of dollars in debt every year based on false and misleading information about the value of an ITT degree and empty promises of high-paying jobs after graduation, according to the Attorney General’s application and a claim filed in the school’s bankruptcy proceedings.
In the application for loan discharge — known as a “borrower defense” application — Attorney General Ellison argued these widespread and pervasive misrepresentations violated Minnesota’s consumer-protection laws. Based on the findings the multistate investigation uncovered and supported with expert testimony, Attorney General Ellison sought full relief to Minnesota ITT students, including refunds of the money students already paid on those loans. Federal law permits the U.S. Department of Education to forgive federal student loans when borrowers were deceived in obtaining loans.
Prior to filing the borrower defense application, in November 2019, Attorney General Ellison joined 24 attorneys general in pushing the U.S. Department of Education under the Trump Administration to broadly relieve federal student debt for students impacted by ITT’s misconduct and abrupt closure.
In response to these efforts, as well as work by the Consumer Financial Protection Bureau and Veterans Education Success, today’s action by the Department of Education will discharge all remaining federal student loans that borrowers received to attend ITT from January 1, 2005, through its closure in September 2016. The decision, based on the Department’s findings of fraud and misconduct, will result in 208,000 borrowers nationwide receiving $3.9 billion in full loan discharges. This includes borrowers who have not yet applied for a borrower-defense-to-repayment discharge. These borrowers will have the federal student loans they received to attend ITT discharged without any additional action on their part.
Additional advocacy for former ITT students
Attorney General Ellison’s pursuit of federal debt relief for the students affected by today’s decision comes on top of other advocacy for former ITT students. In October 2020, Attorney General Ellison secured $1.6 million in debt relief for Minnesota students by reaching a settlement with a trust that held that debt, which the Attorney General alleged were unfair and illegal. The private loan trust agreed to forgive the debt rather than face litigation. In June 2019, Attorney General Ellison secured $1 million in relief for former ITT students by reaching a settlement with another lender that was organized for the sole purpose of providing ITT loans. That company agreed to forego collection of outstanding loans and cease doing business.
The Attorney General’s Office also filed a claim in ITT’s bankruptcy and resolved that claim in a way that ensured maximum relief for defrauded students.
Fighting for all students harmed by predatory schools
In addition to his actions concerning ITT, Attorney General Ellison has been a leader in advocating for students and taxpayers and seeking to hold predatory schools to account, including by:
- Winning $40 million in debt forgiveness and restitution for Minnesotans harmed by illegal recruiting, marketing, and lending operations by Minnesota School of Business;
- Securing $14 million in debt-cancellation and restitution for Minnesotans as part of a $1.85B multistate settlement with loan servicer Navient;
- Securing $2.1 million in private debt relief for former Argosy University students and leading the charge for additional federal loan relief for Argosy students affected by the school’s abrupt closure;
- Shutting down and securing refunds from fraudulent student-loan debt-relief companies; and
- Suing former U.S. Education Secretary Betsy DeVos to stop the Trump Administration from implementing federal rules designed to thwart debt relief for defrauded students and remove accountability for for-profit schools.
A representative of Attorney General Ellison’s Office was also the lead negotiator on behalf of state attorneys general in rulemaking sessions held earlier this year designed to enhance accountability and oversight of schools receiving federal student aid. As part of those sessions, Attorney General Ellison’s Office advocated for fair, clear, and strong rules that would prevent the federal government from giving any more tax dollars to schools that deliver poor results and rely on aggressive and deceptive recruiting to enroll students.
The Minnesota Attorney General’s Office also recently updated its Student Loan Handbook, which provides guidance and information to Minnesotans facing hardships with student debt or considering taking out student loans.