Over the past several years, students across the country took out student loans to attend ITT Technical Institute, often referred to as “ITT Tech.” With campuses in Cary, Charlotte, Durham and High Point, the trade school’s reach was statewide here in North Carolina. Now, thousands of those students—including 1,500 here in NC—will be getting some much-needed debt relief to help with those loans.
What is ITT Tech?
Founded in 1969, ITT Tech is a well-known technical institute. Headquartered in Carmel, Indiana, the school had more than 100 campuses in 38 different states and more than 40,000 students.
Chances are you remember an ITT Tech advertisement just like this one:
Yet, perhaps like most advertisements, ITT Tech’s didn’t live up to the hype.
What went wrong?
In general, trade-school students take out and default on more student loans that other college students. And ITT Tech charged some of the highest tuition among trade schools in the nation according to Barron’s.
To “help” students pay its high tuition prices, ITT Tech offered a somewhat untraditional financial arrangement to students.
Maura Healey, Massachusetts’ Attorney General, accurately described the arrangement on Twitter earlier this week. “ITT offered students temporary credit upon enrollment to be repaid the next year,” she wrote. “When some students couldn’t pay, ITT allegedly pulled them out of class and threatened to expel them if they did not refinance their debt with a high-interest PEAKS loan.”
“Their tactics were wild,” Massachusetts AG Healey wrote.
What is PEAKS, you ask? PEAKS Trust formed after the 2008 financial crisis when students were having trouble finding loans to attend for-profit colleges, according to the Ohio Attorney General. Who ran PEAKS? ITT Tech (with assistance from Deutsche Bank entities).
Unsurprisingly, some students were unable to repay their temporary credit within the year. As a result, ITT Tech pressured them into accepting high-interest loans from a company ran by the school. Because many trade-school students come from low-income backgrounds, this left students to choose between dropping out and losing the credits they earned or accepting the high-interest loans, NC Attorney General Josh Stein has explained. Many students chose the latter option.
More than 80 percent of students defaulted-or are expected to default- on their loans. That’s more than eight out of every ten students defaulting. According to AG Stein, this high percentage is largely attributable to ITT Tech’s high tuition, the high-interest rates, and the ITT Tech graduates’ lack of success in finding secure employment upon graduation. Making matters worse, most of the PEAKS loans aren’t dischargeable in bankruptcy, leaving students with a lifelong shadow hanging over their heads.
How can they be helped?
ITT Tech closed in 2016 amid federal sanctions, investigations and lawsuits.
“Today, we know by our experience that a U.S. institution or business can be forced to shut down without proof of allegations,” Kevin Modany, ITT Educational Services’ chief executive officer, said at the time. “The regulatory assault on our schools and institutions is unprecedented.” According to him, the school never had a “right to pursue [its] right to due process,” something he believed “should be concerning to all Americans.”
The U.S. Department of Education painted a different picture. To the contrary, former Under Secretary of Education Ted Mitchell defend the government’s actions. “It wasn’t a decision we took lightly,” he said in 2016. “Ultimately, our responsibility is not to any individual institution. It’s to protect all students and taxpayers, and I have no doubt our decision to take action was the right one.”
Who is helping NC residents?
Since ITT Tech’s 2016 closure, numerous states have been helping students impacted by the PEAKS high-pressure loan scheme. Back in 2019, A.G. Stein reached a $168 million settlement with Student CU Connect CUSO LLC, another company affiliated with ITT Tech. In that settlement, A.G. Stein was able to get 412 N.C. borrowers more than $4 million in loan relief.
Earlier this week, A.G. Stein announced he and other states’ attorneys general had reached a similar settlement with PEAKS. As a result of the settlement, former ITT Tech students will receive more than $330 million in debt relief. That amount includes more than $12 million for 1,500 NC residents.
“ITT tried to maximize its profits by taking advantage of students who were trying to invest in their education,” AG Stein said. “This settlement is another win in our efforts to get relief for these students and ensure that they can have a fresh start on their educational and financial futures.” AG Stein reaffirmed his commitment to doing “everything in [his] power to protect students from predatory, for-profit schools that break the law.”
North Carolina joined Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming, as well as the Consumer Financial Protection Bureau, in reaching the settlement.
What should former ITT Tech students do now?
Students don’t need to do anything right now to take advantage of the debt relief from this most recent settlement. Soon, PEAKS will mail students notices explaining their rights under the settlement.
But, if you have questions before you receive that notice, people can contact both PEAKS by email at [email protected] or by phone at (866) 747-0273), as well as the Consumer Financial Protection Bureau on their website or by phone at (855) 411-2372).
As a whole, Americans owe more than $1.6 trillion—that’s 1,600,000,000,000—in student loan debt. For context, that’s almost three times the amount of credit card debt in the U.S. That debt is spread across approximately 45 million borrowers, almost 15 percent of the U.S. population.
So, with what most would consider a growing student loan crisis in the country, this settlement undoubtedly is a win for many former ITT Tech students, including those here in North Carolina.
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