Today, former ITT students proposed a $1.5 billion settlement claim in bankruptcy court that would cancel more than $500 million in debts. All participants in the case and members of the class have until April 24 to submit their views of the settlement with the court before it is heard for final approval on June 13. This is good news for former ITT students, but there is still a long way to go.
ITT Tech systematically defrauded students. ITT lied to and misled students about financial aid and cost of attendance, job placement and salaries, the quality of equipment and experience of instructors, the employability of ITT graduates, ITT’s programmatic accreditation, the transferability of credits, and career placement assistance.
It would be simpler to list the things ITT didn’t mislead students about.
Data from 2014 show that on average, ITT graduates earn on average the same or less than high school graduates with no college education. Approximately one in five ITT students defaulted on their federal student loans within three years.
Now, a group of ITT students have reached a proposed a settlement with the bankruptcy estate that includes a $1.5 billion allowed claim. In addition to cancelling nearly $600 million in debts, the settlement would also return the $3 million that students paid directly to ITT after it declared bankruptcy. This landmark settlement shows that the only path forward is to cancel fraudulent and unenforceable debts created by predators like ITT.
The settlement is a good start, but there is still a long way to go to make things right for former ITT students.
More than 7,000 former ITT students have submitted borrower defense applications to the Department of Education to cancel their federal student loans. These loans – and the federal loans of all former ITT students, totaling nearly $4 billion – should be cancelled. ITT’s estate has cancelled the student debts because of the school’s fraudulent actions, and it’s time for the Department of Education and all private holders of ITT debt to do the same.
As Paul Goodwin, a former ITT student, said: “I have still been struggling to pay back my student loans, which I should not even owe because of the way that ITT systematically lied to students. Getting more relief on temporary credit loans is great news for me and my family, but I am still waiting for the Department of Education to discharge my federal student loans.”
We will continue to fight for the Department of Education to meet its legal obligation to cancel these fraudulent student loans.
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