As millions await word on a potential moratorium extension on student loan repayments, the Biden administration has forgiven the student debts of more than 200,000 borrowers who attended the ITT Technical Institute years ago.
The U.S. Department of Education confirmed the cancellation of debts worth $3.9 billion for students enrolled at the said school from Jan. 1, 2005 to September 2016, when ITT Technical Institute closed.
Education Secretary Miguel Cardona said the school made a profit from the student loan programs while disregarding the hardships students would face. The school was investigated for fraudulent lending practices, recruitment tactics and job placement data across its 130 campuses in the country. Federal funding for ITT Technical Institute was scrapped after the school failed to adhere to the standards of accreditation.
Former students of the said institution do not have to apply for qualification but they can expect a letter from the Education Department citing the automatic loan forgiveness.
Broader student debt cancellation to be determined
This is the second-largest student debt cancellation under the Biden administration after the $5.8 billion student loan cancelation for 560,000 defrauded borrowers who attended Corinthian Colleges. However, about 40 million more Americans are awaiting a broader cancellation after Pres. Joe Biden said during his campaign that he wanted to erase at least $10,000 per borrower.
Biden will soon decide on student loan repayments as the payment pause will expire on Aug. 31, 2022. The government activated the pause when the pandemic began in 2020 and has since issued extensions yearly. During this pause, the loan interest was set back to zero.
Cardona said he had daily conversations with the White House regarding the moratorium, citing a decision is coming soon, per CBS News. The secretary acknowledged "a broken system" surrounding student loans.
In March, more than 90 Democrats urged Biden to extend the moratorium until the end of 2022, citing that the administration has the opportunity to fix "policy failures, government mismanagement, and industry abuses" that have existed in the system for decades.
Right now, millions of people are living in limbo, unsure if student loan payments will resume in 16 days. Canceling student debt would provide immense relief to numerous borrowers.@POTUS, now is the time. #CancelStudentDebt
— Congresswoman Cori Bush (@RepCori) August 15, 2022
Student loan consultants and experts see an extension
Meanwhile, some experts believe Biden will extend the moratorium based on reports that loan service providers were told not to contact borrowers for repayments despite the approaching deadline. Some say the pause will be extended because restarting this before the elections in November will be a "political suicide," per Time.
Borrowers may also learn by the end of August if Biden will finally fulfill the promise of a $10,000 student debt cancellation per borrower. However, most experts agree that this will likely not be on the table.
Eventually, however, borrowers will still have to pay the remainder of their students loan. The experts advise borrowers to update their contact information, make a budget for repayments, and review their loan records. They should start assessing the best, cheapest, and easiest way to repay their loans.
