ITT Technical Institute closed all locations and filed for bankruptcy in 2016, leaving students with thousands of dollars in debt. ITT Tech was a for-profit institution that operated for nearly 50 years and had campuses around the country, including locations in Nashville, Johnson City and Chattanooga.
This closure was devastating to students as many were left with thousands of dollars in debt and no degree. Now, three years later, students may be receiving debt relief.
What went wrong?
Students claim that ITT offered them temporary credit to cover the difference in tuition cost between federal student aid and the full tuition amount. Many students thought they were borrowing loans similar to federal student loans, with little to no interest, that did not need to be repaid until after graduation.
In reality, the loans that ITT was offering students had to be repaid before the next academic year. Since most students were not able to pay the loan back so quickly, ITT allegedly pressured students into taking out loans from Student CU Connect CUSO that had extremely high interest rates.
In addition, ITT, in conjunction with CUSO, may have deceived students about the terms and conditions of the loans. According to the attorney general, ITT used pressure tactics to coerce students into accepting the loan before understanding the terms.
Unsurprisingly, the CUSO loan default rate was extremely high due to the high interest rates and the lack of success ITT students had getting jobs that made the loan repayment rates possible.
CUSO under threat of litigation, agreed to relieve more than $168 million in student debt nationwide. Nearly 700 former ITT Tech students in Tennessee will be among the debt relief recipients. Under the terms of the settlement, CUSO will cease doing business and issue cancelled debt notices to all borrowers.