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In 2016, one of the largest for-profit educational institutions of the U.S – ITT Tech- announced its closure. The main reasons for closure were the dispute between the Department of Education and the school, which left no other way for ITT, except announcing the closure. Sure, these disputes did not start without reasonable arguments. It was alleged that the school utilizes pressuring tactics in enrollment to attract students. False paperwork and low quality of education, as well as a high default rate on its loans, also triggered the problem.
One of the reasons for inadequate education quality was grade inflation. In 2011, investigational research claimed that educators consciously increased grades to get more student aid from the government. In some cases, educators were not prepared for classes or even absent from classes. High pressure in recruitment tactics led to the enrollment of students with low educational skills, such as not being able to complete basic math questions. Hence, the quality of education and outcomes were not desirable.
In 2013, ITT tech was a school that had a higher percentage of default on its loans than its graduation. At that time, around a quarter of graduates defaulted on their loans, while the average statistics was only 13%. Students usually defaulted, because they did not know the real total cost of the loans. They only realized their debt after receiving the loan, and sometimes, the interest rate could be as high as 16.25%.
A whistleblower lawsuit started when there emerged a claim that the school paid recruiters sales commissions per student they enrolled. Additionally, the school encouraged its recruiters to mislead prospective students about the programs’ costs and the transferability of their credits. Allegedly, they also misinformed veterans that they would not get any debt.
Sure, after all these claims about mismanagement of ITT Tech, the Department of Education started taking some measures against the school. In 2016, shortly before its closure, the ED perceived the extreme risk of bankruptcy and required the school to double its funds that would cover defaults. The Department of Education obliged ITT to prepare this financial resource in 30 days. Even worse, the ED banned the school from enrolling students who needed the federal student aid as the default rates were very high. At that time, more than 60% of revenues were coming from students with federal loans. Hence, such an announcement quickly showed its consequence on stock prices. Finally, two weeks after the introduction of new requirements, ITT Tech announced it ceases its operations. This decision affected around 40000 students and 8000 employees working there.
While we understand that school disclosure was devastating news for students and the Department of Education took proper measures to decrease its negative consequences. For instance, they tried to make sure that students can transfer their credits to different institutions and continue education to complete their degree programs. Yet, the most significant help was the availability of debt forgiveness programs.
Students enrolled in ITT tech at the time of its closure- 2016- can be eligible for loan forgiveness programs. Also, those who attended up to ten years before this date are qualified. The closure of ITT can make students qualified for two programs. These are the Borrower Defense Against Loan Repayment and Closed School Discharge to eliminate the accumulated debt for educational purposes. Even years after the closure, in 2020 January, the Department of Education granted forgiveness to more than 7000 students and canceled their debts worth $95.1 million. Therefore, if you think you can be qualified for the program, it is an excellent opportunity to stop all your concerns about the loans.
Before delving into the details of the available programs and answering the main questions, let us share a vital notice with you. As attractive as it might seem, especially with the recent forgiveness announcements, it is hard to get rid of debts with federal assistance. Sure, former students of ITT tech have a high chance of debt cancellation through both School Closure Discharge and Borrower Defense Against Loans. However, it will most likely take years if you do not receive any third-party help.
As a basic example, consider the latest announcement- students could only get rid of their debts four years after the closure. Hence, we would recommend you to contact us and get straight to work for fast and proper application. Our experts have dealt with hundreds of such cases. They are aware of all dos and don’ts of application processes to fully exploit your opportunity for a debtless future. We will guide you through the whole process and make sure you do not waste your chance with technical mistakes or misunderstandings because of complex requirements. Contact us now to get the Student Loans Resolved team by your side.
There is an online platform to include all details of your case and apply for debt forgiveness. You will be required to answer some questions to prove that the school misled you and upload documents such as a transcript. However, the way you fill the application is the most crucial element in convincing the ED to discharge your debt. You have to prove that ITT deceived you by giving false promises. If the recruiters lied about accreditation, job opportunities, credit transfers, or did not provide enough information about debt obligations, then you can get rid of your student debt. Also, be careful not to exaggerate or lie about the claims in your application. Even if the ITT Tech truly misled you, your exaggeration of issues could be against your request, and you can fail.
If the ITT Tech became defunct while you were enrolled, on the approved absence, or within 120 days after your withdrawal, then you can be eligible for the Closed School Loan Discharge program. This debt relief program will eliminate all your Direct, FFED, and Perkin Loans taken for educational objectives. You can even receive reimbursement of the payments you made for ITT loans till now. Also, keep in mind that you will not be eligible if you transfer your credits to a new school where you get a comparable degree. For application, all you need to do is to fill a form that you can request from your loan servicer.
Unfortunately, you cannot apply to both programs at the same time. Therefore, you should be well-aware of their requirements and your fit for the programs before choosing one of them. Researching or getting help from Student Loans Resolved experts to find the best plan for you would increase your chance of getting the benefit.
The main thing that matters is the information and details you input to the application form. You can add promotional material, emails, course catalogs with false information, and explain how they misinformed you. Plus, linking your case to previous cases in lawsuits can strengthen your claims.
If you decided to pursue your education in another institution, and transferred credits, then you are not eligible for the School Closure Discharge program. However, you can still apply for Borrowers Defense to Repayment if you faced any fraudulent issues during enrollment.
If you do not know who is servicing your loan, you can log in to your account in Federal Student Aid to find it. Alternatively, you can also call 1-800-4-FED-AID.
The benefit received from the discharge program is not taxable. IT means, you do not need to report this amount as income and pay any taxes for the forgiven amount.
Unfortunately, neither of the options for debt relief covers private loans. The only way to find a solution for eliminating the private debt entirely or partially can be through the discussion with your lender.
Students who graduated before 2016 September can still get rid of their loans. You should prove that the school violated state laws and engaged in fraudulent activities at the time of your enrollment. The Borrower Defense Against Loan Repayment program can be a good option for this purpose. If you cannot prove misconduct, you should continue making payments.
If you transferred your credits from ITT Tech to another school, then you are not qualified to Closed School Discharge. However, you can get the help of the BDALR if your school misled or deceived you. Also, if you enrolled in another school but did not transfer any credits from ITT, you will be eligible for the discharge program.
The Closed School Discharge program does not benefit students who got their degrees in another school in a comparable program. However, if your new program is entirely different than the previous one in ITT Tech, it is not comparable and is eligible for the discharge benefit.
Several factors define comparability. The Department of Education checks:
Do not forget that you must act in good faith and honestly answers questions regarding comparability in the application form. Otherwise, you can lose your chance for defunct ITT Tech discharge benefits.