Debt Relief Deal Reached For Former ITT Tech Students Here Around State
Texas Attorney General Ken Paxton on Friday announced a $ 13 million debt relief deal for 1,430 former ITT Tech students in Texas, potentially including those who attended for-profit college here .
“Students who attended ITT Tech are burdened with unpayable debts which they received while pursuing an honest education. This college and loan program has failed them tremendously, ”said Paxton.
In September 2016, ITT Educational Services, Inc. permanently closed all of its ITT technical institutes, including 10 campuses in Texas, including one in Waco.
ITT had 45,000 students in 38 states.
Nationally, the settlement with Student CU Connect CUSO, LLC provides more than $ 168 million in debt relief to more than 18,000 ITT Tech alumni, Paxton said.
CUSO provided loans to fund the tuition fees of ITT Tech students.
ITT Tech, with insight from CUSO, offered new students temporary credit to cover the gap between the total cost of tuition and the amount of federal student aid provided.
“Although most students believed that, like with federal student loans, the temporary credit should be paid off six months after graduation, ITT Tech requested that the credit be repaid the following academic year,” he said. the attorney general’s office said in a press release on Friday.
“When students couldn’t repay their short-term credit, ITT Tech took the students out of the classroom and threatened to expel them in order to coerce the students into accepting high-interest loans from CUSO,” the press release reads. .
Students were not informed of the cost of the temporary loan repayment until the amount owed was converted into loans.
The default rate on CUSO loans is expected to exceed 90 percent, the attorney general’s office said.
CUSO has agreed to forgo collection of delinquent loans, provide credit assessment services with up-to-date student credit information, and cease operations.
Students will receive notices in the mail with information about their rights under the settlement, the attorney general’s office said.
“I am proud that my office held CUSO accountable for its abusive lending practices and helped students who were forced to sign a loan without knowing the full cost or deadlines,” said Paxton.
In late August 2016, after the US Department of Education banned ITT Educational Services from enrolling new students who use federal financial aid, the for-profit college filed for bankruptcy.
Ministry officials announced the ban among a series of measures intended to increase financial oversight of the company, which had been the subject of state and federal investigations focused on its recruiting and accounting practices.
ITT was also ordered to pay the department $ 152 million within 30 days to cover liabilities in the event of a shutdown, and the company is prohibited from giving any salary increases or bonuses to its executives.
Then Education Secretary John King said it would be irresponsible to let new students enroll amid concerns about the channel’s ability to operate.
ITT said the education ministry’s actions and sanctions forced the shutdown.
In October 2015, Education Department officials placed limits on federal student aid administered by a struggling for-profit college chain after the government determined ITT was not complying with previous orders. aimed at improving its financial controls.