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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
My son could not afford to finance the loans for his school because he didn’t have the credit. They convinced me to get them in my name and I wasn’t the student
I attended ITT at the Troy, MI campus from 2009-2010. After being told I could obtain a degree in my field of telecommunications and was advised that ITT could provide a degree after obtaining 40k in student loans I found out that none of what was told to me about the school or program was not true and I eventually defaulted on my loans and have been being garnished since 2015. Is there anyway to get more info about joining
How do I join this class action settlement. Went to this school from 2014-2016. The school did not keep promises and didn’t have the equivalent and books to teach the students properly. Hugh scam.
12 years of remorse. Tried paying my debt back for the first five years. After 5 years of paying I owed more than what I originally borrowed. I quit paying. Now my credit is ruined.
I would like to join this lawsuit or find one I can join my degree from ITT Tech is worthless
How can I join the law suit. Have 46000 in student loan for a degree that is useless.
I thought I joined the lawsuit over a year or so ago haven’t heard anything yet. I would like it be involved in this lawsuit.
I know I quilfy for this. as well as everyone else here is to. How do we go about getting compensation? Nowhere on here does it say click this? Please let us know, as to we all on here and others not listed to get help.. THANKS DRONING IN DEBT!!
How do I join this?
I know I qualify, how do I know which law suit I fall under?
Enrollment date
March 13 2006
Nov 29 2009 Graduated
How do I find out what I am entitled to if any?
Graduated December 2012
How d ok I join
How do I join? I graduated in 2011 from ITT-Tech, Nashville TN
How to join