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Student CU Connect CUSO, a company created to fund and manage student loans for ITT Technical Institute, has reached a settlement with the Consumer Financial Protection Bureau, in addition to Washington D.C. and 44 states.
As part of the settlement deal, $168 million in ITT student loan debt will be forgiven.
The settlement ends claims that Student CU Connect CUSO engaged in predatory lending practices, practices which attorneys general reportedly called “deceptive and abusive.”
As part of the settlement deal, the company will have to stop collecting on ITT Tech loans, and will be required to make sure that the debts owed through the company are erased from the affected students’ credit profiles. Additionally, the company will be required to notify borrowers that they no longer owe money for the loans.
According to the Denver Post, the settlement deal does not allow students to recuperate any money that they already paid to the school.
The proposed settlement deal has not yet received court approval.
Student CU Connect CUSO has not admitted any wrongdoing, but as agreed to settle the claims nonetheless. CUSO lawyer Susan Schwartz says that the company did not violate any laws, and “was a victim of, not an accessory to” misconduct that could have occurred at ITT Tech, a for-profit college and company.
This settlement deal comes after ITT Educational Services closed around 130 ITT Technical Institute campuses, and filed for bankruptcy in September 2016. This bankruptcy occurred after regulators began to investigate for-profit colleges practices around recruiting and financial aid, says Reuters.
The Pittsburgh Post-Gazette reports that when ITT Tech closed, it was one of the largest for-profit schools in the country, with more than 8,000 employees and 45,000 students.
Reuters goes on to say that ITT misled students about the nature of the loans that they were given. Allegedly, the company offered “temporary credits” that would reportedly make up for deficiencies in financial aid. These credits were presented as similar to federal loans, which are not due until after the students graduate.
However, this was allegedly not the case, and ITT Tech demanded payment on the credits before the student graduated.
When students could not pay, the college allegedly encouraged students to take out loans with CUSO to cover the “temporary credits,” that had fees up to 10 percent, and additional interest rates of up to 16.25 percent.
On the $168 million settlement, the Denver Post quotes Attorney General Phil Weiser, who said, “This settlement makes clear that those lending to students cannot engage in fraudulent or predatory practices adjacent college students, many of whom already face overwhelming debt for an education.”
Weiser stresses that many of the students impacted by ITT’s practices were already vulnerable and faced financial difficulties which were worsened by the alleged deception and costs they were hit with from CUSO and ITT.
This was not the first settlement over ITT’s allegedly deceptive and predatory lending practices. Reportedly, a separate settlement was approved in Indiana that forgave an additional $560 million in ITT student debt.
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36 thoughts on$168M ITT Student Loan Debt Forgiven
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I ATTENDED ITT TECH..