Can Students Attending ITT Tech Have Their Loans Forgiven?

Posted on September 12, 2016 at 12:00pm by
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ITT Technical Institute is shutting its doors only weeks after the Department of Education banned the for-profit college from enrolling students who are using federal loans. This leaves 35,000 current students with few options to finish their education, as some credits obtained at ITT may not transfer to other institutions. However, there is a path to loan forgiveness for some of these students. Current students or those who left ITT Tech within 120 days of the shutdown may have federal loans forgiven. This is known as the ‘closed school discharge’.

Are You Eligible for a Closed School Discharge?

Closed-school discharges erase all remaining debts with no tax penalty from the IRS. The following criteria must be met for before students can receive closed-school discharges.

  • Students must have federal loans. This includes Direct Loans, Federal Family Education Loan Program (FFEL) loans or Federal Perkins Loans.
  • You must be enrolled in classes at the time your school closes, or be on an approved leave of absence.
  • If you are no longer a student, but withdrew from courses within the last 120 days before the school closed.
  • Students who current qualify but then transfer their credits to other institutions will waive their eligibility for this discharge.

Unfortunately, many former ITT Tech students cannot receive discharges on their federal loans. Some of these borrowers have completed their coursework or left the school more than 120 days before it closed.

However, there may be other means for former for these students to discharge their loans. Borrower defense to repayment is another way ITT Tech students might discharge federal loans. Students may be eligible for borrower defense forgiveness if ITT Tech used illegal or deceptive tactics to encourage enrollment or borrowing that is considered fraud under state law.

The Kansas City bankruptcy attorneys at The Sader Law Firm can help struggling borrowers find options for managing student loan debts.


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