US Department of Education Forgives $39.9 Million in Debt

August 16, 2022
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Attorney General Ellen Rosenblum commended the U.S. Department of Education’s (DOE) decision today to forgive or refund $3.9 billion in federal student loan debt for 208,000 former students of ITT Technical Institute. In Oregon, that means 2,090 Oregonians who borrowed to enroll at an ITT school between 2005 and 2016 will have $39.9 million in student debt cancelled.

This outcome comes after AG Rosenblum and Colorado Attorney General Phil Weiser last year led a consortium of 25 state Attorneys General in urging DOE to cancel debt for the thousands of students who were defrauded by ITT. The now-defunct for-profit school encouraged hundreds of thousands of students to enroll and take out loans based on misleading information as to the value of an ITT degree, accompanied by empty promises of high-paying jobs after graduation.

“Today’s decision by the federal government could not be more welcome. For so many former ITT students who had high hopes for their education—but instead were defrauded by ITT—this forgiveness cannot come soon enough. Now these borrowers can put their ITT nightmare behind them — and move on with their lives with one less financial burden hanging over their heads,” said Attorney General Rosenblum.

As Federal Student Aid Chief Operating Officer Richard Cordray put it, “Students who put their trust in ITT were lured by lies about their job prospects and did not get the quality education they were promised. I am glad to announce the results of our work with Attorney General Rosenblum to hold ITT Technical Institute accountable for cheating so many students out of their time and money.”

This is not the first time Oregon’s Attorney General has sought relief for defrauded ITT Tech students. In 2019, Oregon settled for $2.2 million in debt relief to 242 former Oregon ITT Tech students. Then, last year, Oregon settled for $1.6 million in debt forgiveness for 231 former Oregon ITT Tech students with PEAKS Trust, a private loan program run by ITT and affiliated with Deutsche Bank entities.

ITT’s History of Misleading Students

Based on a 2012 congressional report, ITT enrolled roughly 282,000 students across the country between 2007-2010. During this enrollment period, ITT showed a document called “Value Proposition for Employed Graduates” to prospective students with the goal of convincing them to enroll and borrow thousands of dollars in federal student aid. Subsequent analysis of this so-called Value Proposition chart revealed ITT had serious misrepresented the value of its education.

ITT’s Value Proposition chart showed estimated earnings for ITT graduates at $100,000 more than the average earnings of workers with the same credentials over a graduate’s estimated lifetime. Dr. Jordan Matsudaira, an Associate Professor of Economics and Education Policy at Columbia University, evaluated the accuracy of ITT’s claims. Matsudaira found that ITT massively overestimated the financial gains that student borrowers could reasonably expect from an ITT program.