Settlement Forgives $168 Million in Loans of ITT Tech. Institute Students
Thousands of ITT Technical Institute students will have their loans forgiven after Pennsylvania Attorney General Josh Shapiro and 43 other Attorneys General reached a settlement with Student CU Connect CUSO, LLC (CUSO), according to CBS Pittsburg.
The company managed private loans for students at the ITT Technical Institute, a for-profit technical institute with approximately 130 campuses in 38 states across the nation. The institute filed for bankruptcy and ceased operations in 2016.
Nearly 18,000 students from various states who borrowed money between 2009 and 2011 to the tune of $168 million total will be covered under the forgiveness settlement after the federal district court for the Southern District of Indiana ruled against CUSO, The Buffalo News reported.
The settlement follows a complaint filed by the Consumer Financial Protection Bureau that alleged the company of providing substantial assistance to the Institute in engaging in unfair acts and practices by inducing its students to take out loans by a variety of means.
The suit further alleged the company of being reckless in not knowing that many student borrowers did not understand the terms and conditions of the CUSO loans and could not afford them.
“With the private student loan program that ITT and CUSO established, ITT Tech was able to take advantage of thousands of hardworking students who were simply trying to complete their education,” Attorney General Shapiro said.
“ITT aggressively pressured students to take predatory loan options and deceived them about the conditions of their loans. As a result, hundreds of Pennsylvania students were burdened with student loan debt and struggled to find jobs,” Shapiro added.
The proposed stipulated judgment, which is awaiting approval between CUSO and the Consumer Financial Protection Bureau, has ordered CUSO to stop collecting and to discharge all outstanding loans. It also asks all consumer reporting agencies to which CUSO furnished information to delete tradelines relating to CUSO loans.
Last year, the U.S. Department of Education proposed a set of new higher education rules aimed at protecting student borrowers, holding higher education institutions accountable for misrepresentation and fraud, and providing financial protections to taxpayers by at-risk institutions. However, critics feared that the new regulations would make it practically impossible for students who have been defrauded by higher education programs to cancel their debts.