What should you know about student loan forgiveness?

On Behalf of | Aug 27, 2021 | Bankruptcy |

Many Florida residents will be able to breathe a sigh of relief over their student loans. The Biden administration recently announced that it has instituted loan forgiveness for over 100,000 borrowers who attended ITT Technical Institute schools prior to graduation. It’s important to know how it may affect you.

Why did the administration go the route of student loan forgiveness?

The Education Department under President Joe Biden made the announcement of the student loan forgiveness for those who borrowed to attend for-profit colleges. Originally, there was a window of eight years for people to repay their student loans. This was an impossible task for many, who likely ended up filing for bankruptcy as there was no other way to pay back the debt.

It was recently revealed that ITT Technical Institute lied about its finances and encouraged students to apply for hefty loans they wouldn’t be able to repay.

What will the move accomplish for borrowers?

While filing for bankruptcy would have otherwise been the only way out for many borrowers, the $1.1 billion in student loan forgiveness will bring relief to around 115,000 of them. The individuals who will benefit from the move attended 130 different colleges across 38 states. Additionally, around 43% of those who borrowed have said that they are in default on student loans.

According to Education Secretary Miguel Cardona, ITT Tech continuously hid its financial situation from student loan borrowers for many years and tricked them into obtaining those loans.

Students who borrowed toward student loans as far back as March 31, 2008, are eligible as long as they attended a college 120 days within that institution closing but were subsequently unable to complete their studies and earn a degree.