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November 14, 2019

ATTORNEY GENERAL RAOUL CALLS ON U.S. DEPARTMENT OF EDUCATION TO FORGIVE LOANS OF FORMER ITT TECH STUDENTS

Chicago — Attorney General Kwame Raoul, along with a coalition of 21 attorneys general, today called on the U.S. Department of Education (DOE) to immediately forgive the federal student loans of eligible former ITT Tech (ITT) students who attended the bankrupt for-profit school when it closed.

In a letter sent to Federal Student Aid Chief Operating Officer Mark Brown, Raoul and the coalition question whether the DOE has complied with federal regulations that require the DOE to automatically discharge the loans of qualifying borrowers enrolled at closed schools who do not continue their education elsewhere.

“Most schools will not accept ITT credits, preventing students from finishing the programs they started,” Raoul said. “This unfairly leaves deserving students, through no fault of their own, with overwhelming debt loads and without a degree. I am committed to ensuring that all eligible ITT students receive the closed-school discharge relief they deserve.”

Raoul and the coalition note that in May 2019, the DOE estimated that approximately 52,000 former ITT students are eligible for nearly $833 million in closed-school discharge relief. However, recent information obtained from Congress indicates that discharges have only been granted to more than 7,000 former ITT student borrowers – amounting to less than $95 million in relief. The attorneys general are urging federal regulators to clarify whether all eligible ITT students are now receiving the automatic discharges to which they are entitled, and to provide sufficient information to confirm that deserving ITT students have not been excluded from the program.

Federal law requires the DOE to automatically forgive the student loans of students attending the school within 120 days of a school’s closure who did not obtain their degrees and have not transferred credits into the same program at another school. The 120-day window can be extended by the secretary of DOE for good cause. Raoul and the coalition have asked that the window be expanded in the case of ITT given the number of problems that long predated ITT’s closure. The letter also requests details about the number of students whose loans were discharged and the method the DOE is using to implement the automatic closed school discharge.

The Illinois Attorney General’s office has long been a national leader in investigating and enforcing consumer protection violations in the higher education field. Recently, Attorney General Raoul has overseen the rollout of the state’s first Student Loan Ombudsman, a position created by the Student Loan Servicing Rights Act, to provide resources for student borrowers who are struggling to pay student loan payments. Attorney General Raoul has also advocated for protections for veterans in higher education, joining a coalition of state attorneys general calling on the DOE in May to automatically discharge student loans for totally and permanently disabled veterans. In August of 2019, the DOE was ordered to create a process to automatically discharge the loans.

In June 2019, Attorney General Raoul, along with 44 other attorneys general, settled with student loan originator, Student CU Connect CUSO LLC for more than $168 million in student loan debt relief for more than 18,000 former students of ITT Tech, including nearly 500 Illinois students who received more than $4.5 million in relief. Recently, Raoul also announced the DOE will discharge federal student loans held by students of the Illinois Institute of Art, as requested by the Attorney General’s office.

Student borrowers who have questions or are in need of assistance can call the Attorney General’s Student Loan Helpline at 1-800-455-2456. Borrowers can also file complaints on the Attorney General’s website.

Joining Raoul in the letter are the attorneys general of California, Colorado, Connecticut, Delaware, Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Vermont, Virginia, and Washington.

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