NY and CT announce debt relief settlements for ITT Tech students
New York Attorney General Letitia James and her Connecticut counterpart William Tong have announced that their states will receive $5 million and $292,874, respectively, as part of a multistate coalition”™s $330 million debt relief settlement for students of the now-defunct ITT Tech.
The settlement is with PEAKS Trust, a private loan program run by ITT and affiliated with Deutsche Bank entities. ITT filed bankruptcy and was the subject of state and federal investigations regarding its loan program that carried interest rates much higher than the rates for federal loans.
The attorneys general noted the default rate on the PEAKS loans is projected to exceed 80%, owing to the high cost of the loans and the inability of many ITT graduates to find jobs that earned enough to make repayment feasible. The defaulted loans are still impacting students”™ credit ratings and are usually not dischargeable in bankruptcy.
Under the settlement, PEAKS agreed to forgo collection of the outstanding loans and cease doing business. The company will also send notices to borrowers about the canceled debt, ensure that automatic payments are canceled and supply credit reporting agencies with information to update credit information for affected borrowers.
“New Yorkers look to institutions of higher learning to help support them in their educational endeavors, not act as bullies,” James said. “PEAKS and ITT Tech took advantage of helpless and low-income students and threatened to kick them out of school if they didn”™t take out loans at astronomical rates.
“Today”™s settlement will finally right this wrong and provide hundreds of millions in relief to students across the country, including more than $5 million to New York borrowers, because students should never be saddled with a lifetime of debt and bad credit at the hands of predatory lenders.”
“Thirty-nine Connecticut students enrolled in ITT Tech to seek an education, but were instead given debt and empty promises,” Tong said. “Students”™ hopes and dreams were preyed upon and this settlement should serve as a strong reminder that such lending practices will not be tolerated.”