ITT Class Action Seeks Student Loan Forgiveness

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A group of former ITT Technical Institute students are suing the college in bankruptcy saying they were misled by recruiters and should have their student loans forgiven.

The students allege that they were lied to by sales representatives for the colleges, that they carry debt from student loans, and that they did not get jobs the college promised.

The class action asserts that the students’ lives have been hurt by ITT, and they want their student loans forgiven by the bankruptcy court.

According to the lawsuit, “ITT relentlessly pitched itself to students as a sound investment with a healthy return in the form of guaranteed or near-guaranteed entry-level employment in a lifelong career.”

However, the complaint continues “[i]n reality, ITT deliberately and severely underinvested in resources needed to deliver on these promises, leaving students with an expensive but valueless credential.”

To back up this assertion of under-investment, the class action claims that “[b]etween 2012 and 2016, ITT spent a combined total of $131,000 on all capital expenditures—technology updates and curriculum development—per campus.” The complaint contrasts that with, “[i]n just a single quarter in 2016, ITT spend $200,000 compensating its CEO.”

In addition, the class action also asserts that ITT spent billions of dollars repurchasing shares of its own stock, which provided a benefit to the management who owned shares.

“ITT’s spending on boosting its stock, compensating executives, and marketing dwarfed ITT’s investment in students, even though ITT enrolled a student population that required intensive educational supports in order to obtain any good outcome from a postsecondary program,” according to the complaint.

The ITT deceptive advertising lawsuit claims that the area where ITT spent the most money was on marketing.

“ITT’s business model depended on expansion and increasing enrollments year over year,” the complaint states. Because of this, recruiters and sales staff were constantly pressured to meet student enrollment quotas that were set by the central office.

Recruiters who met or exceeded those quotas were paid bonuses, but were publicly shamed if they did not, which gave them an incentive to aggressively market the colleges and mislead potential students.

The class action alleges that ITT recruiters misled students about the programs offered at ITT, the ability to transfer credits, and the overall cost of the programs. Moreover, financial aid reps continued these deceptions to keep students enrolled at ITT, according to the complaint.

The class action is brought by five former students of ITT: Jorge Villalba, James Eric Brewer, Joshua Cahill, Juan Hincapie, and Cheryl House. All state that they obtained associate or bachelor’s degrees from ITT, but claim that they “experienced deceptive recruitment practices” and that they have not benefitted from their ITT education.

The complaint also quotes from thousands of other former students about their negative experiences at ITT, including “abusive debt collection practices.”

This is not the only class action against ITT in its bankruptcy case. Last September, former employees of ITT also sued the college, alleging that the school violated federal law by laying off all of its employees without 60-days advance notice.

The student debt lawsuit requests certification of a “all individuals who attended any ITT campus, regardless of how long they were enrolled, from at least 2006 up until ITT’s closure in 2016.”

The complaint asserts violations of consumer protection statutes and breach of contract. The class action seeks forgiveness of student loan debt, as well as compensatory damages.

The former students are represented by Eileen M. Connor, Toby R. Merrill, Victoria Roytenberg and Yan Cao of the Legal Services Center of Harvard Law School.

The ITT Student Debt Class Action Lawsuit is Jorge Villalba, et al. v. ITT Educational Services Inc., et al., Case No. 16-07207-JMC-7A, in the U.S. Bankruptcy Court for the Southern District of Indiana, Indianapolis Division.

UPDATE: On Jan. 3, 2018, a proposed settlement would effectively cancel $560 million in private student loans burdening former students of the now-bankrupt ITT Technical Institute.