ITT Tech Students getting multi-million dollar debt relief
Ohio's Attorney General Dave Yost has announced a multi-state settlement that will give $6.8 million in debt relief to about 870 former ITT Tech students in Ohio.
The settlement is with Student CU Connect (CUSO), LLC. The company was essentially created to offer loans to finance student tuition at ITT Tech, which was a technical institute that closed down in 2016.
"These students were misled, pressured and sometimes threatened into borrowing from this lender," Yost said. "They've had to carry the heavy weight of these unreasonable loans for far too long, but today they can finally breathe a sigh of relief."
Yost alleged that ITT Tech, with CUSO's knowledge, offered students temporary credit upon enrollment to cover the gap in tuition between federal student aid and the full cost of education.
Students were supposed to repay the credit before the start of the next academic year, even though ITT and CUSO should have known students would be unable to repay it by that time.
Many students thought the temporary credit was like a federal loan and would not be due until six months after they graduated. When the credit was due ITT Tech pressured students into accepting loans from CUSO, which for many students carried high-interest rates, far above rates for federal loans.
ITT Tech's pressure tactics included pulling students out of classes and threatening to expel them if they did not accept the loan terms.
Students were given a choice to either accept the loan from CUSO or drop out, but ITT Tech's credits did not transfer to most other schools.
The default rate on CUSO loans was projected to exceed 90% because students who graduated from ITT Tech had trouble finding a job and paying back their loans.
According to the Attorney General's office, the defaulted loans continue to affect the credit ratings of former students and are usually not dischargeable in bankruptcy.
According to the settlement, CUSO has agreed to forego collection of the outstanding loans and will 'cease doing business.'
CUSO's loan servicer will notify borrowers of the canceled debt and ensure that automatic payments are canceled.
The settlement also states that CUSO is to supply credit reporting agencies with information to update credit information for affected borrowers.
The 43-state settlement will result in debt relief of $168 million for more than 18,000 students.
Former students impacted by the settlement will receive notices with more information about their rights. Those with questions can contact Attorney General Yost's office by calling 800-282-0515.