ILLINOIS (WAND) - Democratic Senators are pressing Secretary of Education Betsy DeVos to forgive loans for a college gone bankrupt.
In 2016 ITT Technical institute collapsed, closing 130 campuses nationwide, including one in Springfield, and declaring bankruptcy. The college failure affected nearly 45,000 students, including 6,000 veterans. Students were left with high debt and an inability to repay it.
On Dec. 20, Democratic senators sent a letter to Secretary of Education Betsy DeVos calling for full federal student loan discharges for former ITT Tech (ITT) student borrowers defrauded by the now-defunct school.
In November, a federal judge recognized a $1.5 billion claim by students in the bankruptcy proceedings based on the company’s violations of consumer protection laws. The settlement also forgave $600 million in private student loan debt owed to ITT and refunded $3 million in student payments previously made to the company. The Department last reported on May 1, 2018, that more than 13,000 pending claims from ITT borrowers remain unprocessed.Â
Through the Higher Education Act, Congress created a mechanism called Borrower Defense (BD) for students defrauded by institutions of higher education to receive federal student debt relief. The Department has broad authority and the evidence necessary to document how ITT’s predatory practices give rise to a cause of action under applicable State law, and to subsequently discharge all of the underlying loans automatically on a group basis to all former ITT students with federal loans who attended between 2006 and 2016.
