Attorney General James Announces More Than $2.5 Million In Debt Relief For New York Itt Tech Students
Attorney General James Announces More Than $2.5 Million in Debt Relief for New York ITT Tech Students
Multistate settlement delivers justice for students in 43 states and DC
Credit Reports for all students affected will be repaired
NEW YORK – New York Attorney General Letitia James today announced that her office obtained an agreement to provide $2.58 million in debt relief to 288 former ITT Tech (“ITT”) students in New York as part of a settlement with 44 State Attorneys General. The agreement was made with Student CU Connect CUSO, LLC (“CUSO”), which was created for the sole purpose of providing private student loans to students at ITT — the now defunct for-profit college.
“Instead of helping students further their education, CUSO and ITT targeted, exploited, and bullied young people into taking predatory loans that would have lasting impacts on their lives,” said Attorney General Letitia James. “This settlement will ensure these students are not saddled with a lifetime of debt and bad credit, providing relief to hundreds of low-income New Yorkers.”
The investigation revealed that ITT — with CUSO’s knowledge — targeted low-income students and specifically offered them a “temporary credit” upon enrollment to cover the gap between the maximum amount of federal student aid available and the full cost of attending ITT. However, unlike typical financial aid or student loans offered by most colleges and universities, this “temporary credit” was due to be repaid before the student’s next academic year. Both ITT and CUSO knew or could easily deduce that most students would not be able to repay these “temporary credits” when due, and, instead of giving students time to pay off the credits, ITT pressured students into accepting loans from CUSO. Some of the high-pressure tactics ITT used included pulling students out of class and threatening to expel them if they did not accept the CUSO loans. Many students were forced to choose between taking unwanted loans from CUSO and dropping out of school.
CUSO then specifically preyed upon these students, many of whom could not pay off their loans and who would likely default on them. More than 90-percent of students defaulted on their loans, and those defaults — which have generally not been dischargeable in bankruptcy — continue to affect students’ credit ratings today.
Under the settlement, CUSO has agreed to forego collection of the students’ outstanding loans and will cease to do business. CUSO’s loan servicer will send notices to borrowers about the cancelled debt within 30 days and will ensure that automatic payments are cancelled. The settlement also requires CUSO to provide updated information to Credit Reporting Agencies for affected borrowers — effectively deleting the loans from the students’ credit reports — so that any students’ credit affected by defaulted loans to CUSO are repaired and restored to their previous states.
The investigation was conducted in conjunction with 44 State Attorneys General across the nation, and its subsequent settlement will result in debt relief of more than $168 million for over 18,000 former ITT students, who took out loans between March 2009 and December 2011. The agreement is contingent upon federal court approval of a related settlement between CUSO and the Consumer Financial Protection Bureau.
Students with questions about the settlement can contact the New York State Attorney General’s Office at 1-800-771-7755.
ITT filed for bankruptcy in 2016, and had 149 campuses across the country. The three ITT campuses in New York were in Albany, Liverpool, and Getzville.
This case was handled by Special Counsel Carolyn Fast, under the supervision of Laura J. Levine, Deputy Bureau Chief of the Consumer Frauds and Protection Bureau, Bureau Chief Jane M. Azia, and Chief Deputy Attorney General for Economic Justice Christopher D’Angelo.