Loan debt to be forgiven for hundreds of former ITT Tech students in Indiana
INDIANAPOLIS, Ind. – A legal settlement means hundreds of former ITT Tech students in Indiana will have their student debt wiped out.
According to the Office of the Attorney General, the agreement includes $5.4 million in debt relief for 602 former ITT Tech students in Indiana. Attorney General Curtis Hill said it’s part of a larger $168 million settlement involving more than 22,000 former ITT students in 43 states and the District of Columbia.
ITT Tech folded in September 2016 amid a federal crackdown on for-profit colleges. The school closed more than 130 campuses nationwide and filed for Chapter 7 bankruptcy.
The federal Consumer Financial Protection Bureau said ITT offered students “temporary credit” loans. Many students thought they worked like traditional federal student loans, which don’t have to be repaid until six months after graduation.
However, the temporary credit loans had to be repaid before the students’ next academic year. Both ITT and Student CU Connect (CUSO), which financed the loans, knew or should have known most students wouldn’t be able to repay in time, the attorneys general alleged.
Students said ITT pressured them to accept the loans, which carried interest rates “far above rates” for federal loans. Tactics included pulling students out of class or threatening to expel them if they didn’t accept the loan terms.
Since many schools didn’t accept ITT credits, students had to either drop out of school and lose their credits or agree to the loans. Students didn’t know the true cost of repayment until after the credit was converted to a loan.
Under the terms of the settlement, CUSO will stop collecting on the outstanding loans and will cease doing business.