June 19, 2019
LANSING – Michigan will receive $15,363,336.52 in debt relief for 1,868 former ITT Technical Institute (ITT) students as part of a multi-state settlement, Attorney General Dana Nessel announced today. A coalition of attorneys general from 43 states and the District of Columbia reached a settlement that will result in debt relief of more than $168 million for over 18,000 former ITT students across the country.
The lending company – Student CU Connect CUSO, LLC (CUSO) – offered tuition loans at the for-profit institution, originating approximately $189 million in loans between 2009 and 2011. ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to restrict their access to federal student aid.
“Paying for college is challenging enough without contending with unscrupulous and abusive lending practices,” said Nessel. “This settlement holds CUSO accountable for preying on ITT Tech students eager to expand their education. I’m proud my office was able to secure the relief these Michigan students deserve and we will continue to protect those seeking better opportunities through education.”
The attorneys general alleged that ITT – with CUSO’s knowledge – offered students temporary credit upon enrollment to cover the amount remaining after federal aid was applied to the cost of attendance. Students were expected to repay the temporary credit prior to the following academic year – although many were under the impression that payment, like federal loans, wouldn’t be due until six months after graduation.
Students received pressure from ITT to obtain loans through CUSO to cover the temporary credit, often at interest rates far above federal loans. Tactics included removing students from class and threatening expulsion if loan terms weren’t accepted. Given the inability to transfer credits obtained at ITT to most schools, students took loan options through CUSO and were allegedly forced into default after discovering the true cost to repay.
Under the settlement and with no action required from affected students, CUSO agrees to forego collection of outstanding loans and cease conducting all business, notify all credit reporting agencies of the status for all borrowers, and ensure their loan servicer notifies and cancels all automatic payments. The coalition’s settlement was contingent upon federal court approval of a related settlement between CUSO and the federal Consumer Financial Protection Bureau approved on June 14, 2019.
A copy of the settlement can be found here.