The school year is over for 45,000 ITT Tech students before it even began. Less than two weeks after it was banned by the federal government from enrolling any more pupils for the coming academic year, the school’s parent company announced it will shutter all 137 ITT Technical Institute campuses in the U.S.
The closure is the final chapter of a two-year-long regulatory saga for Carmel, Ind.,-based ITT Educational Services, Inc. ITT Tech has been under investigation by government officials for underperformance, alleged fraud and deceptive marketing tactics since August 2014. It’s not the first for-profit to buckle under increased federal scrutiny. Last year, now-defunct Corinthian Colleges, Inc. shuttered over 100 campuses under similar circumstances.
ITT’s fate may be sealed, but its students’ futures are far less certain. The vast majority of for-profit students take on large sums of student debt to fund their tuition. Roughly 35,000 of ITT’s 45,000 students will be eligible for some form of student debt relief, according to the U.S. Department of Education (ED). If each and every student were to file for discharge, the ED could be on the hook for as much as $500 million, ED Under Secretary Ted Mitchell said on a call with reporters Tuesday. And most of that burden would fall on taxpayer’s shoulders. The ED only required ITT Tech to set aside $123.65 million to cover loan restitution.
“I have no doubt that our decision to take action was the right one in service of these goals,” Mitchell said. “But I also recognize that today’s news may cause disruption, confusion, and disappointment to many of ITT’s current students.”
Students of schools that abruptly shut down have few different routes they can take to continue their education and have their student loan debt forgiven.
Here are the three best options:
Option 1: File for Federal Loan Discharge
Who’s eligible: Students are eligible for a federal loan discharge if: Their school closed while they were enrolled and before they were able to complete their program, or if they withdrew from their school’s program at least 120 days before the school closed.
What a federal discharge means:
A federal loan discharge would wipe away any federal loan debt incurred while attending ITT Tech. If students think they qualify for loan discharge, they should contact their loan servicer. To find your loan servicer’s information, along with information about your loans, log into your student loan account at studentaid.ed.gov.
You should continue making payments on your student loans while your discharge status is being determined, the ED recommends. If you miss payments, they could go into default and negatively impact your credit history.
If your loans are approved for a discharge, you will no longer have to make payments and you should receive a refund for past payments. All negative information on your credit history related to those discharged loans should be removed.
Option 2: Transfer credits to a new school
It’s likely some students will want to transfer their ITT Tech credits to another institution and continue their education. But it’s important to know that transferring credits can impact their eligibility for potential student loan relief.
“If a student goes to the same program, then there wouldn’t be any discharge,” Mitchell said. “But if a student were to transfer into a different program then they are likely eligible for a discharge.”
For example, if a student chooses to switch majors from business to public health, then some or all of their federal loans used to pay for business credits obtained at ITT may be discharged.
On the other hand, if the student chooses to pursue the same program, their loans will most likely not be discharged — even if the new institution does not accept some of their ITT Tech credits. Unfortunately, many students may run into this problem.
The ED has been “working hard with community colleges and institutions to help encourage them to be as flexible as they can be with ITT students,” Mitchell said. “For students who choose to restart or continue their education at another college, we encourage them to carefully consider factors like program quality and cost.”
Option 3: File a Borrower’s Defense Claim
Who’s eligible: Anyone who feels they have been defrauded by ITT Tech (for example,you felt their recruiting practices were deceptive) . This may be the only option for ITT Tech graduates who are left with student loan debt but are not eligible for federal student loan discharge.
What it is: When a student files a borrower’s defense claim , they are asking the ED to forgive student loan debt incurred while attending a higher education institution. A student can file a borrower’s defense claim even if their school has not been closed.
In order for a claim to be successful, the student must prove the institution committed fraud.
The ED is still investigating ITT Tech for evidence that it defrauded students in some way. But until those findings are finalized, the burden of proof will be on students, who will have to come up with their own evidence of fraud in order to file a claim.
As it stands, the process for filing a borrower’s defense claim has yet to be streamlined online, but there is a full list of required materials that you can find here. Once the ED receives your documents, eligible loans will be placed in forbearance and any ongoing collection efforts on defaulted loans will cease. (Note: Interest will still be accruing.)
Lastly, be sure to bookmark this website (studentaid.gov/itt) to stay on top of updates from the ED on how ITT Tech’s closure will impact students.
Have you been impacted by the ITT Tech closure? E-mail us at firstname.lastname@example.org
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