Alumni of the ITT Technical Institute of Boise will have their federal diploma student loans canceled, following action by the US Department of Education.
Seventy ITT students who owed $1.7 million – an average of $24,286 per person – see their debt erased after being defrauded by the for-profit school, a spokesperson for the U.S. Department of Education told the Idaho statesman via email.
Not only that, but students, who were stranded when ITT Tech closed without warning in 2016, will have money they paid for their repaid federal loans. This includes money paid voluntarily or through a collection agency. The discharge will also be reported to the credit bureaus so that any unfavorable information is removed.
The Boise students were among approximately 16,000 students nationwide who the government says were deceived by ITT, Westwood College, DeVry University and Minnesota School of Business/Globe University. The action will lead to the cancellation of $415 million in student loans.
“Students rely on the sincerity of their colleges,” US Secretary of Education Miguel Cardona said in a press release. “Unfortunately, today’s findings show too many cases where students have been misled by loans from institutions or programs that have failed to deliver on their promises.”
The loans were made through the Federal William D. Ford Direct Loan Program, the Federal Family Education Loan Program, and the Federal Perkins Loan Program. The discount does not apply to loans issued by states or private lenders.
Most of the students affected by the loan forgiveness have not attended other schools in the three years since ITT Tech closed, and their discharges will be made automatically, the Department of Education said. Students who enrolled elsewhere but did not complete a course of study may still be eligible for a discharge but must apply.
ITT operated as a “large-scale, for-profit predatory institution” from its beginnings in 1969 until it declared bankruptcy and abruptly ceased operations in September 2016. according to a scathing 209-page report published last month by The Project on Predatory School Lending at Harvard University.
Hundreds of thousands of students have enrolled at ITT Tech at 130 campuses across the country, drawn by “promising careers in growing fields with high salaries,” the report said.
“But those promises were pure lies,” the Harvard investigation concluded. “ITT’s business model was both nefarious and simple: incentivize students to enroll and stay enrolled and reap the benefits of their federal student aid. ITT encouraged its recruiters to attract as many people as possible. Recruiters preyed on prospective students in vulnerable situations, saying whatever it takes to sell ITT to unsuspecting individuals.
The vast majority of ITT students left school without a degree or “ended up with a useless degree,” the report said. What they left behind was “exorbitant student debt and the inability to repay it.”
The Predatory School Loans Project represents hundreds of thousands of former ITT Tech students in a class action against the ongoing bankruptcy proceedings of the deceased company.
The study authors say they documented 95 instances of wrongdoing at ITT’s Boise campus alone. These included fraudulent registration and financial practices; misrepresent that ITT credits would transfer to legitimate colleges and universities and even other ITT programs (they didn’t); and lying about the cost of attendance, instructor qualifications, and graduate placement rates.
Overall, the study reported over 13,000 verified cases of wrongdoing. They were documented by student complaints, internal company documents, audits, human resources records and other documents, according to the report.
The ITT Technical Institute came to Boise in 1986 after purchasing the highly respected Link’s School of Business, which had been teaching students in Treasure Valley since 1906.
ITT Tech was founded in 1969 and went public in 1994, before declaring bankruptcy and closing 22 years later.
In 2014, 58 of ITT Tech’s operations, including Boise, were operating at a loss, says the report. The company eviscerated administrative and teaching staff, forcing them to obtain these services from the company’s headquarters or another campus.
The Boise operation was forced to have one employee in the positions of finance manager and registrar, positions previously held by two people. Students started complaining about problems with their schedules.
“This problem with the calendar goes back to being reduced to a small campus census and letting go of our registrar,” the report quotes the Boise school’s anonymous principal in a December 2014 email sent to ITT headquarters. Tech. “We had to combine the position of finance director and registrar, which took time to hire someone. They trained for DOF and started transitioning to Registrar, got frustrated and quit.
“Another campus handled our schedules and the dean tried to help with schedule changes, transfer credits, etc., after the registrar left.”
The Harvard investigation found that 31% of ITT Tech’s revenue in 2014 was spent on marketing. This included $50 million for national television advertising, $48.8 million spent with local television stations, and $1.7 million for radio advertising across the country.
Since January 2021, the Department of Education has issued $9.9 billion in loans to more than 678,000 ITT Tech borrowers nationwide. The agency could not provide numbers Friday on the total number of Idaho students with loans that have since been canceled.