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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
How do I apply for this?
This school was a nightmare now even though i graduated I was told I could get a job in my field of study Drafting and Design and I have been doing a job that has nothing to do with what I so call learned at ITT TECH which in fact was nothing. I had to get outside visits from others not in the the school to get through school and now I am still paying for the school fees is there something I need to do to join.
How do I join that place was terrible!
Did you get any feedback from this matter by anyone ?
Place was absolute garbage. I was told IN 1999 IN Dayton, OH. the classes were accredited and would easily be transferred to a four year institution. Yeah…the four year ITT institution in Indianapolis. Believing I was on the way to a wonderful career and all I acquired was debt. To the lady who told me about the accreditation…you should be ashamed of yourself. And if I ever get the chance to confront you face to face…
I went to the same school under the same exact assumption was even lied to about the loans and grants was told the opposite the loans were not the grants as implicated and the grants were the loans is what I was told I was taken advantage of as a young kid in my early twenties they played on that…I believed I was on my way to a great career as well as I could transfer to write state after my two yrs were up I graduated went to apply for store state and found out that I was lied to after two yrs graduating at the top of my class I was so pissed off hurt and lied to as a young man I have had screwed up credit ever since I couldn’t buy my house I had lost some apartments because of bad credit from these loans and now I’m older I can’t do anything all because these loans have screwed up my credit I’m ready for this to be over with I can’t afford $500 a month for loans that I was lied to to get me to sign those papers of enrollment
Started ITT in 2008 graduated in 2010 for Drafting and Design, never got a job in the field. Was told they would help with job placement, never happened, that my credits would transfer a number of schools (which come find they didn’t) and they were in the process of getting nationally accredited so major universities would also be taking the credits in the near future.
The only thing that I got from ITT is debt and my credit ruined.
Would love to get rid the black cloud that has been following me for 9 years.
One of the biggest mistakes of my life. I should’ve done more research before I signed. I was given a full five minutes to read the contract before one of my classes. I didn’t get the help I needed and I’ve regretted it every day since. Saddled with a large debt which I’m refusing to pay because of the lousy experience and I’m hoping the case will find in favor of the students and all other students.
What actions should be taken to be added to this list. I am a victim of ITT fraud, graduated in 2004 from the SanBernadino, California location with an associates in Electronic Engineering. ITT NEVER helped me with finding employment as promised and I’m stuck with this huge debt and my degree isn’t worth anything.
I paid off all my loans for them back in 2007, aprox $10,000.00. What do i need to do to get my money back? None of my credits transferred to Wayne State University and i had to take all my classes all over again. I am so pissed this pos school did this!?
This whole thing seems to be such a scam. First I got scammed in to attending a worthless college to get an inadequate education and now every one who claims to want to help you really only wants the money you don’t have because you didn’t get the education and jobs promised. BS
I’m feeling everyone’s pain. I went to ITT Tech from 2014 – 2016. Was misled about so many things. Have a written a letter and sent it to the Whitehouse, talked to my state representatives office, tweeted many people, trying to get help from somewhere to get the debt forgiveness. Have had a response letter, but, no actually action taken to relieve the debate yet. Is sickening that we have spent years dealing with people who had missled and actually lied to us to get us to sign up with the school in hopes of a good education. Wanting to support our families and receive an opportunity for a good career and with hands on training, job placement. I’m still currently struggling for a good job, and still struggling with the student loan debt still going. I cannot even afford to go to school and try to start again. Struggling still is not the plan I had when I started at ITT Tech. Supporting my family well, a successful career and life was the end goal… why do and how are these schools allowed to be in business for so long??? And are able to lie and use so many people just looking for a brighter future, just to get money.