Tens of thousands of alumni at the ITT Technical Institute, a for-profit chain that collapsed four years ago, will not have to repay $ 330 million in private student loans that the prosecutors call “reckless” and misleading under the agreement announced Tuesday .
The agreement, which includes a federal regulator and attorney general from 47 states, covers loans made through ITT’s Peaks Loan Program, often used by students who maximized their federal student loans Was.
According to a complaint filed by the Consumer Financial Protection Bureau, the program’s loans carried high interest rates and implicated debtors in debt, which ITT knew would be unable to repay. In some cases, financial aid officers sometimes signed loan documents without the knowledge or permission of the borrower.
The bureau, in its petition in the US District Court of Southern District Indiana, wrote, “Many students were pushed into peaks loans, did not understand the terms of their peaks loans, or did not realize they had taken loans. Had taken.”
The settlement agreement, which requires the approval of a federal judge to be enacted, covers about 35,000 borrowers, many of whom have been left with high debt and wasted credit. The deal requires loan owners to cancel all outstanding debt balances and halt collection efforts.
Trusts established by Deutsche Bank made loans, but ITT effectively controlled them. The loan was sold to investors, but the high default rate – about 80 percent – and ITT’s bankruptcy mean that the investments are not made.
A spokesman for Deutsche Bank declined to comment on the settlement.
ITT abruptly closed after bankruptcy in 2016 and after a government action for schools deceived students about the quality of their educational programs and the career prospects of their graduates. Thousands of ITT alumni are still unhappy with the loan loan for the degree, with many saying they were found almost worthless.
The settlement announced on Tuesday that a consumer bureau arrived last year with students from another ITT loan program, Student CU Connect CUSO, to eliminate $ 168 million in private student loans.
But so far, the federal government – the nation’s largest student lender – has so far refused to cancel a lot of ITT students’ loans, despite findings by officials in the Department of Education that the ITT “major” and “widespread” fraud Was engaged in Thousands of federal debt borrowers seeking relief through a government program have been denied; Even those whose claims were approved were told in some cases that none of their debts would be liquidated.