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A proposed settlement would effectively cancel $560 million in private student loans burdening former students of the now-bankrupt ITT Technical Institute.
The settlement was negotiated by a group of former students who intervened in the ongoing ITT Tech bankruptcy proceedings.
Represented by Harvard University’s Project on Predatory Student Lending, the students argued ITT Tech fraudulently induced them into taking on excessive debt, giving them claims they can now assert as bankruptcy creditors.
The students seek to represent a Class consisting of hundreds of thousands of other former students who attended ITT Tech between at least as early as 2006 and the time the school closed in 2016.
If approved by the court, the settlement would bar the bankruptcy trustee from collecting, assigning or transferring about $560 million in debt that originated in loans ITT Tech made directly to students. These loans were typically made to cover the gap between total school costs and the funds otherwise available to each student.
The bankruptcy estate would also have to refund about $3 million in loan payments received since the bankruptcy began.
In total, the settlement recognizes a class claim of $1.5 billion against each of the bankruptcy debtors’ estates – significantly lower than the $7.3 billion originally asserted in the class proof of claim. A letter from the students’ attorneys says they will continue to seek cancellation of all ITT Tech-related student debt.
The court is expected to make a decision on settlement approval by the end of this month.
The Consumer Financial Protection Bureau sued ITT Tech in February 2014. According to the CFPB, ITT Tech lured students into debt using false or misleading statements about the schools’ accreditations, job placement rates, and transferability of credits. The schools allegedly induced students into taking out high-interest loans that they had little or no chance of repaying.
ITT Tech fought the CFPB’s lawsuit for several months with little success. After a federal appeals court declined ITT Tech’s petition for an interlocutory appeal, the company closed all of its nearly 140 campuses and initiated bankruptcy proceedings.
The student group intervened in the ITT Tech bankruptcy proceedings in January 2017 with a class action adversary complaint. Plaintiffs Jorge Villalba, James Eric Brewer, Joshua Cahill, Juan Hincapie and Cheryl House, all former ITT Tech students, alleged they were misled into over-borrowing for an education that did not provide them the benefits they were reasonably led to expect.
Attorneys for the students are encouraging other former ITT Tech students to file an individual proof of claim if they wish to participate in the proceedings and believe they qualify. If the student’s proposed Class is approved by the court, all other student’s claim will be incorporated into the Class claims and litigated by the attorneys representing the Class.
The ITT Tech Fraudulent Student Debt Class Action Lawsuit is part of the ITT Tech bankruptcy proceedings, In re:Â ITT Educational Services Inc., et al., Case No. 16-07207-JMC-7A, in the U.S. Bankruptcy Court for the Southern District of Indiana.
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233 thoughts onITT Tech Students Negotiate $560M in Student Loan Cancellation
I attended itt tech and graduated in 2009 I could not get employment with my degree. I also been unable to borrow money or obtain loans as my credid score was dropped into the very poor range, due to the student loans I owed. I now had the federal offset program take my income tax refunds totaling $8600.00 and I am 10 days from being homeless. All I want is what I paid on the loans back. It’s been almost a year since the debt forgiveness was granted in January 18 of 2018. Where is my money? I am 54 and can not go back to school I can’t find employment and was counting on job placement the school promised me. Now I am seeking welfare and public housing. I never thought this would happen I always worked and paid my bills now I can’t do anything please help!
I was a current student at ITT Tech when they closed their doors. If anyone could give me information on how to join the class action to be released of the large amount of student loans I accrued during my time there, I would greatly appreciate it.
My name is Paul Burgess and I went to ITT Tech and received a Associate’s degree in Network Systems Administration from 2012 to 2014 then went back for a Bachelor Degree in Cyber Security in 2015. In December of 2016 we were notified they closed the doors. I was on the list of students for this lawsuit but I keep getting letters from the Department of Education that they want there money.
So i need to know if i am still on the list and if I’m not how do i get on the list? I can not get a job using the degree i received because employers say that they are no good. So if the degree is no good I think I shouldn’t have to pay the $38,000 that they charged me. Please let me know one way or another.
My name is Javier melgarejo and I’m also ITT Tech student when everything got close how do I get added to the class lawsuit against ITT Tech please let me know what I need to do thank you.
Is it possible to be added as a claimant for this class action suit against ITT Tech? If so how?
Yea me too can I join?
Can i be added to this legal action for Itt-tech
I was attending ITT when they closed, now I have $20,000 in student loan debt and not even a piece of paper with my name on it from that place.
I would also like to be added to the list…
I am a victim of ITT fraud, graduated in 2000 with associates in Electronic Engineering, and ITT NEVER helped me with finding employment as promised and I’m stuck with this huge debt.
They lied and I feel scammed by their misrepresentation of promising contacts and opportunities for employment with companies of my field of interest… NEVER HAPPENED.
I attended ITT Technical Institute in 2009- 2011 for a bachelor’s degree in criminal justice when just after 2 years they decided that they weren’t going to do The Bachelors program and try to make me do a project management bachelor’s instead I left the school instead of finishing out my bachelor’s degree so I got an associate’s degree and I went somewhere else trying to get my Bachelor’s in criminal justice and my credits was not transferable for most places how do I go about getting this taken off of me because I can’t even use my degree I didn’t get the degree that I signed up for and they tried to force me into something else now I’m 55 almost $56,000 in debt for degree that I don’t even use.
I attended ITT Technical Institute in 2009- 2011 for a bachelor’s degree in criminal justice when just after 2 years they decided that they weren’t going to do The Bachelors program and try to make me do a project management bachelor’s instead I left the school instead of finishing out my bachelor’s degree so I got an associate’s degree and I went somewhere else trying to get my Bachelor’s in criminal justice and my credits warrant transferable and most places how do I go about getting this taken off of me because I can’t even use my degree I didn’t get degrees that I signed up for and they tried to force me into something else now I’m 55 almost $56,000 in debt for degree that I don’t even use