COLUMBUS, Ohio (WKBN) – Ohio Attorney General Dave Yost announced Tuesday that some former ITT students will get debt relief as part of a national settlement with the school’s lender.
Nationally, the settlement will result in debt relief of about $330 million for 35,000 students who have outstanding principal balances.
The settlement is with PEAKS Trust, a private loan program run by the for-profit college and affiliated with Deutsche Bank entities.
ITT filed bankruptcy in 2016 amid an investigation into its practices and restrictions by the U.S. Department of Education to restrict ITT’s access to federal student aid.
PEAKS was formed after the 2008 financial crisis when private sources of lending available to for-profit colleges dried up. ITT developed a plan with PEAKS to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education.
According to the settlement, PEAKS and ITT should have known that many of those students who given those credits would not be able to repay the debt when it came due nine months later.
Some students said they did not understand the credits and thought it was like a federal student loan and wouldn’t have to be paid until six month after graduation.
Prosecutors said that ITT pressured and coerced students into accepting the loans from PEAKS, which carried high interest rates for many borrowers.
Under the settlement, PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business.
PEAKS will send notices to borrowers about the canceled debt and ensure that automatic payments are canceled.
The settlement also requires the PEAKS to supply credit reporting agencies with information to update credit information for affected borrowers.
Students do not need to take any action to receive debt relief. The notices will explain their rights under the settlement. Students may direct questions to PEAKS at firstname.lastname@example.org or 866-747-0273, or the Consumer Financial Protection Bureau at (855) 411-2372.
A settlement was reached earlier this summer with another lender that targeted ITT students with similar practices.
That settlement is with Student CU Connect CUSO, LLC.
ITT Technical Institute operated schools in the Youngstown and Pittsburgh areas, among other locations across the U.S.
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