US cancels $500M in student loan debt

By Ovunc Kutlu

ANKARA (AA) – Citing fraudulent practices by the shuttered school, the US has canceled $500 million in loan debt for 18,000 former students of the ITT Technical Institute, the Department of Education said in a statement on Wednesday.

The institute – which was present in 38 of the US’ 50 states before it closed in 2016 – “misled students about the ability to transfer their credits to other institutions ... credits rarely transferred and borrowers made little to no progress along their educational journey, yet were saddled with student loan debt as a result of their time at ITT," the statement said.

On March 18 the department took action to grant $1 billion relief to 72,000 debtors with previously approved borrower defense claims, saying: "This action reinstated discharges for 41,000 borrowers and will help protect another 190,000 borrowers from the risk of losing their discharges."

Borrower defense refers to cancelling loans if a school misled students or “engaged in other misconduct in violation of certain state laws,” according to the department.

The $1 billion “brings total loan cancellation under borrower defense by the Biden-Harris Administration to $1.5 billion for approximately 90,000 borrowers," it said.

On March 29 the Joe Biden administration cancelled an additional $1.3 billion in student loans for 41,000 borrowers with total and permanent disability.

This brought the Biden administration's total cancellation in student loans to around $2.8 billion.

Total student loan debt in the US, however, stands at almost $1.75 trillion, an average $39,808 debt per student, according to real-time data on usdebtclock.org as of Thursday.

Democratic members of Congress are pressing President Biden to use his executive power to issue a general loan forgiveness of up to $50,000 per person, citing debt’s role in keeping people from buying houses and cars, getting married, and taking other steps to protect their financial future.