COLUMBUS — Ohio Attorney General Dave Yost announced a multi-state settlement Friday that will provide $6.8 million in debt relief to about 870 former ITT Tech students in the state. Nationally, the 43-state settlement will result in debt relief of $168 million for more than 18,000 former students.
The settlement is with Student CU Connect CUSO, LLC (CUSO), which offered loans to finance student tuition at ITT Tech, a failed for-profit college. ITT filed for bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to restrict ITT’s access to federal student aid. CUSO’s loan program originated about $189 million in student loans to ITT students between 2009 and 2011.
“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.”
A related settlement between CUSO and the U.S. Bankruptcy Trustee was approved on June 14. The settlement with the attorneys general is also contingent on federal court approval of another related settlement between CUSO and the federal Consumer Financial Protection Bureau, which is also being announced today.
The attorneys general alleged that ITT, 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. Repayment of the credit was due before a student’s next academic year, although ITT and CUSO knew or should have known that most 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, however, ITT pressured students into accepting loans from CUSO, which for many students carried high interest rates, far above rates for federal loans. ITT’s pressure tactics included pulling students out of classes and threatening to expel them if they did not accept the loan terms. Because students were left with the choice of accepting a loan from CUSO or dropping out and losing any credits they had earned – ITT’s credits would not transfer to most other schools – most students enrolled in CUSO loans.
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.
This article was submitted by the Ohio Attorney General office.