Nearly $1.4 million in debt relief is on its way for 143 former ITT Tech students in Iowa as part of a 44-state settlement, Attorney General Tom Miller announced Friday.
The settlement with Student CU Connect CUSO LLC — a credit union service organization that offered “deceptive” loans to help finance students’ tuition at the shuttered ITT Tech — will mean more than $168 million in debt relief nationally for 18,664 former ITT students, according to Miller.
The for-profit ITT on Sept. 6, 2016, notified the U.S. Department of Education — along with postsecondary education oversight bodies in 38 states — of its intentions to cease online and classroom-based instruction and operations at its 136 ITT Technical Institute locations.
ITT had campuses in Cedar Rapids and Des Moines.
Ten days later, according to the government’s Federal Student Aid office, ITT filed for bankruptcy protection to liquidate its business.
In early 2017, former students filed a class-action lawsuit accusing ITT of violating consumer protection laws by “engaging in deceptive practices, using abusive, unfair and deceptive recruiting and retention strategies and financial practices, and by falsely obtaining accreditation,” according to court documents.
The students also accused ITT of breaching their enrollment contracts by closing before they could complete their education and by denying students promised “post-graduation refresher courses and lifetime job placement assistance.”
ITT’s closure came amid an investigation by numerous attorneys general. That investigation started in 2014 and found ITT — with CUSO’s knowledge — offered students temporary credit to cover gaps in tuition and federal student aid, according to the Kentucky Office of the Attorney General, which also announced millions in victim debt relief Friday.
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“When the credit payment came due at the end of the each semester, ITT pressured and coerced students into accepting loans from CUSO, which for many students carried interest rates far above those of federal loans,” according to a Kentucky news release. “Pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the loan terms.”
The credit union service organization, under threat of litigation, agreed to settle and forego collection on outstanding loans. CUSO also must stop doing business and provide credit reporting agencies updated credit information for affected borrowers.
In a statement, Attorney General Miller noted the settlement holds CUSO accountable “for its participation with ITT in subjecting students to abusive lending practices.”
“It also provides relief to Iowans who attended ITT Tech and incurred debts for a questionable education that they could not repay or discharge,” Miller said.
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