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A class action lawsuit has been filed by former students of now bankrupt ITT Education Services, alleging that its partner Vervent Inc. is a sham student loan program that is still collecting money from students.
Vervent’s ITT student loans program, called PEAKS, was allegedly perpetrated by the defendant and Deutsche Bank.
According to the ITT student loans class action, the purpose of the program was to generate cash for the school and to show that ITT had a non-federal independent source of tuition revenue – part of federal requirements for financial aid.
The plaintiffs maintain that the loans were made to borrowers who had little to no repayment ability and that the terms of the loans were unconscionable and abusive.
The interest rate on the student loans went as high as 17.5 percent, accruing daily, and the students had to pay an undisclosed 10 percent origination fee, the plaintiffs allege.
The ITT student loans class action lawsuit says that ITT was responsible for creating more than $7 billion in student debt loans with more than 80 percent of the debt having been defaulted. ITT students allegedly earn the same or less than high school graduates with no college education and cannot sustain the debt.
One plaintiff, Jody Aliff, says that he was a student of ITT at the San Dimas and Orange Country campuses of ITT during 2008 through 2013. He allegedly obtained an associates degree from ITT and then a bachelor’s degree in information systems and cybersecurity.
Aliff claims that he incurred roughly $120,000 in student loan debt while attending ITT, which includes around $13,000 in PEAKS loans. He says that he currently works as a computer repairman for a bank in Los Angeles, a job that does not require a bachelor’s degree.
In 2010, when funding from other private loans ran out, Aliff obtained ITT student loans from the PEAKS program, the Vervent class action lawsuit states.
Aliff was allegedly informed that he couldn’t continue his second year courses unless he obtained a PEAKS loan, which he did. In addition, according to Aliff, he was told that he could not graduate with his associate’s degree unless he obtained another loan from PEAKS, which he did as well.
The plaintiff claims that his PEAKS loans were for approximately $5,000 and $8,000, totaling $13,000. Aliff says he started paying off his PEAKS loans through payments to First Associates Loan Servicing, the loans servicing company for ITT student loans. He ceased making payments in April 2015 due to financial problems, according to the Vervent class action lawsuit.
After he was unable to pay for the loans, he allegedly started receiving calls from First Associates regarding payments on his PEAKS loan. Aliff told the servicing company that he could not afford to pay the loans.
At one point, Aliff reportedly obtained a one year deferment on the loans hoping that his income would increase and he would be able to make payments in the future. However, after the deferment, he could still not pay for the loans.
Beginning in 2018, Aliff states that he started receiving further calls from Activate Financial, a collection agency for the PEAKS ITT student loans and, to this day, he still receives calls from Activate concerning the debt.
Aliff says he received notices from Activate Financial that they were willing to accept a lower payment for his two loans, but only if payments were made within 30 days and if they were in lump sums.
These notices reportedly did not inform him that the statute of limitations had passed and that Activate Financial could not collect the loans via legal proceedings.
“At no time did Activate Financial inform Mr. Aliff that the statute of limitations had run on his PEAKS loans or that Activate Financial could not bring legal action seeking payment of the loans,” the Vervent class action lawsuit maintains.
The common issues of facts in this class action lawsuit include: 1) whether PEAKS was a real student loan program or a sham which did not have any underwriting, and was just a way for ITT to defraud students, its investors, and the Department of Education; 2) whether the defendants misrepresented the legal name of PEAKS loan obligation; and 3) the extent to which PEAKS loan obligations were subject to expired statutes of limitations.
Prospective Class Members include: “all individuals who (i) attended any ITT campus, and (ii) have a balance owed on a PEAKS loan, or (iii) made any payment on a PEAKS loan within the applicable statutes of limitations and until notice is provided to the class.”
Did you go to school at ITT and obtain ITT student loans to pay for your education? Leave a message in the comments section below.
The plaintiffs are represented by Timothy G. Blood, Leslie E. Hurst, and Aleksandr J. Yarmolinets of Blood Hurst & O’Reardon LLP, Irv Ackelsberg and John J. Grogan of Langer Grogan & Diver PC and Paul Arons of the Law Office of Paul Arons.
The ITT Student Loans Class Action Lawsuit is Jody Aliff, et al. v. Vervent Inc., et al., Case No. 3:20-cv-00697, in the U.S. District Court for the Southern District of California.
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50 thoughts onITT Student Loans Were ‘Abusive,’ Lawsuit Claims
How can i get rid of my ITT loans?
I paid 10,000 do I still can get my money back? I was harassed by them wanting me to pay. I couldn’t afford to get my credit go bad so I started asking my family to help me with a loan. I ended up paying peaks loans n my family. So do I have the right to claim my money back?
How did u get a hold of them? I all of a sudden have a negative remark on credit report and it says vervent inc monthly payments $5 allegedly. I could have easily paid that now
My score went down 40 points and the number listed is
Disconnected. Any advice? Thanks
I have been try to pay off my private loan through first Associates. I paid $9,000 since June. And now my loan got wipe off. It’s sucks! I wish I would just pay the minimum payment.
Anybody know that we would get any money back ?
I just don’t understand how all the private loans get canceled but the Federal government will not cancel theirs! I have 84,000!
Do you think we will get money that we have been paying back ?
I am currently repaying a Peaks Loan
Peaks is messing up my credit big time..
Same here.
When I call peaks, I’m either speaking to the wrong department that can’t verify my account balance. Or the correct department never picks up (I have screenshots showing I stayed on hold over 2 hours).
I went as far as to ask my bank to verify where my monthly payments were being sent (I had started to suspect the company or my account no longer existed).
Turns out the only way get a coherent response from them is to schedule a call back, and be glued to your phone for next two weeks.
I was told halfway through my two year program that I’d need to take out a peaks loan in order to graduate.
It seems that all the payments I’ve made to peaks were merely to stave of the interest accruals. I was lucky enough to find a job in my field, but learned very quickly that a degree was not required for my position. I was interviewed by 5 different managers simply because the stigma of an ITT degree is something difficult to overlook.
I have a Peaks loan from attending ITT. I have been making payments to them monthly as well. I am not seeing any reduction in amount and they have raised the interest rate on me at least 3 times now.
Owe 49k in loans from Itt… how do I be apart of the class action suit or how do I get rid of this debt?