Last week, the U.S. Department of Education announced that more than 100,000 former ITT Tech students will now receive automatic student loan forgiveness. Additionally, Louisiana State University is forgiving institutional debt for students enrolled during the coronavirus pandemic. Here’s what to know about this week’s student loan news.
2 current trends within student loans for the week of Aug. 30, 2021
1. An additional 115,000 former ITT Tech students will receive student loan forgiveness in September
On Aug. 26, Secretary of Education Miguel Cardona broadened the scope of who can receive discharges for student loan debt accrued at the now-closed ITT Technical Institute — a move that will discharge an additional $1.1 billion in student loans for 115,000 former students. Students who left the now-closed school on or after March 31, 2008, will now be eligible for automatic forgiveness.
This extension was the result of further investigation into the misconduct that the school engaged in. “For years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave the school,” said Cardona. “Today’s action continues the department’s efforts to improve and use its targeted loan relief authorities to deliver meaningful help to borrowers.”
How this affects student loans
ITT Tech has been at the center of a series of lawsuits, and hundreds of thousands of former students have received compensation and debt forgiveness. The U.S. Department of Education has initiated two other waves of loan forgiveness for former ITT Tech students just this year, clearing $1 billion for 72,000 borrowers in March and $500 million for 18,000 borrowers in June.
These actions are a result of borrower defense to repayment, a federal law that grants student loan discharge to borrowers who attended a school that misled them or engaged in misconduct.
Borrowers who qualify for this latest discharge should receive forgiveness automatically once the Department of Education starts processing discharges in September. If you enrolled at another school within three years of ITT Tech’s closure, you may have to submit a closed school application in order to be eligible for a discharge.
2. Louisiana State University forgives $7 million of student loan debt accrued during the pandemic
Louisiana State University (LSU) is the latest college to use coronavirus relief funds to forgive institutional student loan debt. Approximately 4,000 students who enrolled during the pandemic will see their debt erased, an amount totaling over $7 million.
These funds come from the Higher Education Emergency Relief Fund, a government program designed to support colleges and universities during the pandemic. Of the funds distributed, a portion was required to be allocated toward student debt relief.
Institutional student loan debt includes any loans owed directly to the school. This loan forgiveness does not apply to private student loans or federal student loans.
How this affects student loans
LSU students will hear from their financial aid office if they qualify for debt relief. To receive loan forgiveness, students must be enrolled in at least one credit hour, be a U.S. citizen or eligible noncitizen, be seeking a degree and have a 2020-21 FAFSA filed with the school.
Colleges and universities are continuing to roll out student debt forgiveness using funds from the Higher Education Emergency Relief Fund. Among the colleges that have provided student relief in recent months are Fayetteville State University, Wilberforce University and Delaware State University. As the fall semester kicks off at many schools, additional relief could be forthcoming.
Here’s how you can get prepared
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.
- Federal student loan forgiveness update: See where the latest policies and proposals stand
- ITT Tech student loan forgiveness update: What former students need to know
- U.S. Department of Education issues over $5.8 billion in student loan forgiveness for borrowers with total and permanent disabilities