INDIANAPOLIS — A new settlement is providing debt relief for 1,354 former ITT Technical Insitute students in Indiana.
The debt relief is part of a settlement with PEAKS Trust in partnership with 46 other states, the District of Columbia, and the federal Consumer Financial Protection Bureau.
Under the settlement, PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business. The Attorney General’s office said PEAKS will send notices to borrowers about the canceled debt and ensure that automatic payments are canceled. The settlement also requires the PEAKS to supply credit-reporting agencies with information to update credit information for affected borrowers.
PEAKS Trust, a private loan program, worked with ITT to develop a plan to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of education.
However, when the temporary credit became due, ITT pressured and coerced students into accepting loans from PEAKS. This included pulling students out of class and threatening to expel them if they didn’t accept the loan terms.
The Attorney General’s office said the loans came with default rates projected to exceed 80% due to the high cost of the loans and the lack of success ITT graduates had getting jobs that earned enough to make
However, the loans preyed on students with low-income backgrounds, who were left with the choice of either enrolling in the PEAKS loans or dropping out and losing any benefit of the credits they had earned as ITT’s credits would not transfer to most schools.
“This settlement ensures that former ITT Technical Institute students are no longer subjected to the abusive lending practices of PEAKS Trust,” Attorney General Hill said. “This program, like ITT before it, is now defunct. We hope this result eases the financial stress that so many former students have undoubtedly endured.”
Students do not need to take any action to receive the debt relief. The notices will explain their rights under the settlement. Students may direct questions to PEAKS at firstname.lastname@example.org or 866-747-0273, or the Consumer Financial Protection Bureau at 855-411-2372.