Although closed in 2016, ITT Tech continues to be in the news headlines due to the struggle of its students. Since 1969, this educational institute has enrolled more than 35000 students across its 137 campuses. When it closed due to various reasons, its students were left with considerable student loans and less-worthy degrees.
School closure leaves many students in a challenge as they should find new programs or stop their education at all. Many of them cannot deal with debt repayments with degrees that are not highly valuable to employers anymore.
Yet, there are programs to grant partial or full forgiveness to ITT Tech students. Sure, these programs might not be full compensation for the time and effort put into studies, but at least they can decrease the debt burden.
What Happened with ITT Tech?
It is advisable to understand what happened with the educational institution to find the right way to deal with its student loans.
One of the main reasons for closure was the improper distribution of ITT Tech loans. The institution created its loans- PEAKS and CUSO- to help students finance their education. However, allegedly, these loans were distributed even to those students who clearly could not meet the eligibility requirements.
ITT Tech used loan pools to guarantee repayment. If many students could not repay, ITT Tech should have compensated. When the officials revealed that many borrowers are unable to repay the debt, they were afraid that ITT Tech would default.
In this case, the Education Department required ITT Tech to provide a credit letter- a huge amount of money as funds to pay for student loans if ITT Tech defaults. First, they asked for $124 million and then an additional $247 million.
ITT Tech officials mentioned that they were unable to provide that huge amount of funds as credit letters, and those were prohibitive to their survival. As a result of all these events, ITT Tech closed in 2016.
ITT Tech Loan Forgiveness
So, what happened to students when the ITT Technical Institutes closed? According to student aid laws, if schools close, the students can get rid of their federal student loans through Closed School Discharge. This program only applies to federal loans, excluding private debt and loans owed directly to ITT Tech.
In such cases, class-action lawsuits started, and some were successful. For example, in 2016, the Federal Bankruptcy Court Judge approved $600 million worth of loan forgiveness to more than 75,000 students. They even received a $3 million refund. However, this forgiveness was only applicable to student loans owed directly to ITT Tech.
Besides, the Education Department announced in 2018 that they would allocate $150 million loan forgiveness to students, including those enrolled in ITT Tech, through the program called Borrowers’ Defense to Repayment. This program protects students who were misled and defrauded by the schools. It is possible to get up to 100% forgiveness for federal loans through Borrowers’ Defense.
We will talk about these options- Closed School Discharge and Borrowers’ Defense to Repayment in subsequent sections.
ITT Tech Loan Forgiveness Update in 2021
President Joe Biden has always been in support of forgiveness programs to relieve individuals from student debt. He allocated $2.3 million forgiveness earlier in 2021 to support Borrowers’ Defense to a Repayment program.
This time, he granted $500,000 worth of student loan forgiveness to ITT Tech loan borrowers. As a result of this update, more than 18,000 ITT Tech students would get out of debt and start a new beginning for a debt-free life.
In the upcoming days, the Education Department will determine who is eligible for the ITT Tech loan forgiveness. Qualifying borrowers will receive 100% debt elimination. Keep reading to find details on Borrowers’ Defense to Repayment.
Other Loan Forgiveness Options Available for ITT Tech Students
The government cares about its people struggling with student debt. If you have federal loans, you can find student aid programs to eliminate or reduce the remaining debt balance. For ITT Tech students, those programs are accessible:
- Closed School Discharge
- Borrowers’ Defense to Repayment
- Other general forgiveness options such as private student loan forgiveness
Closed School Discharge
The closed School Discharge program eliminates the debt of students who are enrolled or have withdrawn a short period before the closure date. It grants 100% debt forgiveness to borrowers who do not transfer credits and continue education in a comparable program.
So, if you continued education in another school but in a similar area due to the studies in ITT Tech, you will not qualify for forgiveness. Usually, if borrowers do not continue education and do not apply for this program, they become qualified automatically after three years. For more information, you can check the official Student Aid website.
Borrowers’ Defense to Repayment
Borrowers’ Defense to Repayment is another program available to federal loan borrowers. It helps students whose schools engage in fraudulent activities. If you were misinformed about the true cost of education, curriculum, job replacement rates, or transferability of credits in ITT Tech, then you can demand the elimination of your debt.
The logic behind this program is that if the student does not get a worthy degree, they should not be responsible for the debt. However, first, you will be required to prove the unethical or illegal activity of the school.
Besides, you can only claim forgiveness for education-related matters. Personal issues such as physical injury or harassment cannot be based on this program.
Other Forgiveness Options
Federal loan borrowers can also apply to programs like Public Service Loan Forgiveness or Perkins loan cancellation. For private student loan borrowers, there is almost no option for forgiveness. However, they can reduce the debt burden through student loan refinancing. Refinancing a loan can save borrowers money as they might get lower interest rates.
Additionally, if you face financial challenges, make sure you talk to your loan servicer or lender in the first place. They can provide several conveniences to pay the debt effectively.