MONTGOMERY, Ala. – About 289 former students of ITT Technical Institute in Alabama will share $2.3 million in debt relief as part of a multi-state settlement, Alabama Attorney Gen. Steve Marshall said Friday.
ITT Educational Services closed down in April 2016, after the U.S. Department of Education told the company it couldn’t enroll students who use federal financial aid. The company filed for bankruptcy later that year.
ITT Tech campuses in Madison, Bessemer and Mobile were among those that shut down.
The settlement is with the loan company Student CU Connect CUSO LLC, which the Alabama Attorney General’s Office said had approximately $189 million in student loans to ITT students between 2009 and 2011. The company has agreed to forego collection of outstanding loans, according to the AG’s office.
Students whose loans are cancelled will receive notice from CUSO’s loan servicer.
Authorities said ITT would offer students temporary credit to cover any gaps between federal student aid and their tuition. Students were not told that they would have to repay that credit before the next academic year, according to the attorneys general, and the companies knew most students wouldn’t be able to repay it by then. They said ITT would then pressure students into accepting CUSO loans with high interest rates.
“The manner in which students were strong-armed into taking out loans with this company and the misleading information they received is outrageous,” said Attorney General Marshall in a news release. “CUSO now is being held to account for its participation with ITT in subjecting ITT students to abusive lending practices. I am pleased that this settlement brings relief to those in Alabama and throughout the nation who were victimized through the disgraceful actions of CUSO and of ITT.”
The settlement is still contingent on federal court approval of a related settlement between CUSO and the Consumer Financial Protection Bureau.