Attorney General Phil Weiser secures $1.6 million in debt relief for 168 former ITT Tech students
June 14, 2019 (DENVER, Colo.)— Today, Attorney General Phil Weiser announced that the Office of the Attorney General has secured $1,668,772 in debt relief for 168 Coloradans who incurred student loan debt after attending various ITT Tech (ITT) programs in Colorado.
As explained in today’s court filing on behalf of a number of States, ITT knowingly offered students Temporary Credits to cover tuition that were extremely difficult to repay by their due date. To repay the credits, ITT would then pressure and coerce students into accepting loans from a private lender, the Student CU Connect CUSO, LLC (CUSO), whose interest rates were far higher than federal student loans.
“Rather than providing students with the education and future they were promised, ITT and CUSO knowingly led—at times even coerced—students into a predatory student loan trap. This settlement makes clear that those lending to students cannot engage in fraudulent or predatory practices against college students, many of whom already face overwhelming debt for an education,” said Attorney General Weiser. “I am also very pleased that we secured important debt relief for student borrowers.”
Today’s filing detailed how ITT implemented a range of pressure tactics, including pulling students out of class and threatening to expel them if they did not accept CUSO loan terms. ITT and CUSO did not inform students of the true cost of repayment for the credits until after they were converted into CUSO loans. The CUSO loan program made $189 million dollars in student loans to ITT students nationwide between 2009 and 2011.
Unsurprisingly, student default rate on the CUSO loans was extremely high (projected to exceed 90 percent) due to the high cost of the loans as well as the lack of employment/financial success ITT students had upon graduating. The impact of student debt and ensuring defaults is staggering, injuring many individuals and undermining our economy. Notably, defaulted loans continue to affect students’ credit ratings, are typically not dischargeable in bankruptcy, and undermine the ability of graduates to start businesses.
The settlement requires CUSO to cease operations and cancel outstanding loans and automatic payments. Additionally, CUSO must send notices to borrowers about the cancelled debt and work with Credit Reporting Agencies to update the credit information of affected borrowers. In 2016, ITT filed bankruptcy amid investigations by State Attorneys General and action by the U.S. Department of Education to restrict ITT’s access to federal student aid.
Nationwide, more than 18,000 former ITT students in 43 states will receive over $168 million dollars in debt relief as a part of the settlement.
Lawrence Pacheco, Director of Communications
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