Biden orders $3.9 billion in loan forgiveness for borrowers from defunct for-profit institution

President Joe Biden’s Department of Education announced Thursday that $3.9 billion in student loans related to the for-profit now-definct ITT Technical Institute would be forgiven, bringing total loan forgiveness so far to $32 billion.

The decision was made to give relief to the ITT borrowers because the institution did not live up to its promises to students and essentially defrauded them, according to the DOE.

“It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises,” Education Secretary Miguel Cardona¬†declared. “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.”

Before shutting its doors in 2016, ITT was one of the largest for-profit technical schools, but it couldn’t keep operating after allegations that it misrepresented students’ abilities to get jobs after completing the program led to a ban on students getting federal aid to attend.

Protecting students

“The Biden-Harris Administration will continue to stand up for borrowers who’ve been cheated by their colleges, while working to strengthen oversight and enforcement to protect today’s students from similar deception and abuse,” Cardona continued.

Democrats would like Biden to extend student loan forgiveness to all student borrowers, at least in some amount, but he has only said he is considering whether to do so.

Currently, student loan payments are on a moratorium until August 31, with payments, interest and collections are paused.

Only around 1.2% of borrowers are still making payments voluntarily, according to the Wall Street Journal.

It is possible that Biden will extend the moratorium further, due to the weak economy and uncertainty going forward.

Republican opposition

Republicans oppose student loan forgiveness for all borrowers for several reasons, including the fact that the program would be of greater benefit to higher-income students and would add to government spending and debt to do so.

Some argue that student loan forgiveness would allow colleges and universities to charge even more for college, and that it would not be fair to those who didn’t take student loans or already paid them off.

A strong proponent of student loan forgiveness is Rep. Alexandria Ocasio-Cortez (D-NY), who continually claims that her $174,500 congressional salary just isn’t enough to cover things like housing and student loans — which kind of proves Republicans’ points.

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