Attorney General reaches settlement for former ITT students to receive $330 million in debt relief
Tennessee Attorney General Herbert H. Slatery III announced Wednesday that he reached an agreement to receive $15 million in loan forgiveness for former ITT Tech students in the state.
NASHVILLE, Tenn. (WVLT) - Tennessee Attorney General Herbert H. Slatery III announced Wednesday that he reached an agreement to receive $15 million in loan forgiveness for former ITT Tech students in the state.
Currently, there are plans to forgive around 2,068 loans for the former students as part of a settlement with 43 attorneys general and the federal Consumer Financial Protection Bureau.
According to a release from the Attorney General’s office, this settlement with PEAKS Trust, a private ITT loan program, will provide about $330 million in debt relief to about 43,000 loans.
During an ongoing investigation to restrict its access to federal student aid, ITT filed bankruptcy in 2016. Besides Tennessee, ITT had 148 locations around the country.
“Many former ITT students in Tennessee were put in a terrible position by the school and it’s loan program,” said General Slatery. “This settlement puts an end to PEAKS loan collection and requires it to stop doing business.”
ITT developed a plan with PEAKS, which was formed after the 2008 financial crisis, “to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education”.
“When the temporary credit became due only nine months later, ITT pressured and coerced students into accepting loans from PEAKS, which for many students carried high interest rates, far above rates for federal loans. Pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the loan terms. Many of the ITT students were from low-income backgrounds and were left with the choice of enrolling in the PEAKS loans or dropping out and losing credits they had earned, because ITT’s credits would not transfer to most schools," the release reads.
PEAKS has agreed that it will “forgo collection of the outstanding loans and cease doing business” under the settlement. PEAKS has to notify borrowers about the cancelled debt and make sure all automatic payments are cancelled. The settlement also requires PEAKS to supply credit reporting agencies with information to update credit information for affected borrowers.
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