ITT Tech students obsolete will receive a loan forgiveness of $ 168 million



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WASHINGTON – More than 18,000 alumni of the ITT Technical Institute, a private for-profit college that shut down in 2016, will benefit from debt relief of a total of $ 168 million. dollars under an agreement announced Friday.

The Consumer Financial Protection Bureau and a coalition of 44 states and the federal district of Columbia said they had reached an agreement with a lender who was cooperating closely with ITT to cancel private student loans.

The CFPB alleged that the lender, Student CU Connect CUSO LLC, had provided high-cost loans to ITT student borrowers, even though he knew or was reckless not to know that 'many of them did not understand the terms and conditions of the CUSO loans and could not pay them. "

ITT, which was once one of the largest for-profit colleges in the United States in terms of turnover, filed for bankruptcy and abruptly closed in 2016, forcing more than 40,000 students out of nearly 150 campus in 38 states to look for another school and leaving a lot with a large student loan.

Richard Bernard, a lawyer at Foley & Lardner LLP representing CUSO, said the lender was pleased that the regulations were becoming effective, claiming that he had "acted correctly and in good faith in the creation and the Administration of the student loan program ".

This closure occurred after the federal government banned ITT from registering new students benefiting from a federal student loan. This action was part of a crackdown on for-profit colleges, including the liquidation of Corinthian Colleges Inc., the largest chain of its kind.

The federal government has already agreed to waive federal student loans for students who have attended for-profit colleges such as ITT and Corinthian.

According to the terms of the latest settlement, CUSO must stop collecting all outstanding loans and release them all, said the CFPB.

The CFPB stated that CUSO loans had high interest rates and high default rates, charging annual interest rates of 16.25% for borrowers with below-average credit ratings, accounting for nearly half of all borrowers.

After the closing of ITT, borrowers projected by CUSO would miss 94% of its loans.

In the settlement, the CFPB alleged that CUSO had provided "substantial assistance" to ITT, which it had sued in federal court prior to its bankruptcy for allegedly unfair and abusive acts and practices, in violation of a law. federal law on loans.

CUSO was created jointly by five credit unions: Eli Lilly Federal Credit Union, Bellco Credit Union, Credit Union of America, Directions Credit Union and Veridian Credit Union.

Write to Yuka Hayashi at [email protected]

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