Illinois officials say more than 1,000 former ITT Tech students could be eligible for $9.4 million in loan forgiveness
More than 1,000 former Illinois students who attended the for-profit college ITT Technical Institute could be eligible to receive more than $9.4 million in student loan debt relief, according to the attorney general’s office.
Illinois Attorney General Kwame Raoul said in a news release Tuesday the loan forgiveness is part of a $330 million nationwide settlement reached by 46 states, the District of Columbia and the Consumer Financial Protection Bureau with PEAKS Trust, a private loan manager.
PEAKS, created in 2009 to manage private loans for ITT students, offered students of the now-defunct college a temporary credit to cover tuition not financed through federal aid programs, according to the settlement agreement.
PEAKS acknowledged as part of the settlement it knew or should have known students would not be able to repay the credit when it was due nine months later. It acknowledged that when they couldn’t repay it on time, students were forced to take out a loan from PEAKS that typically had higher interest rates than federal student loans or face expulsion, according to the settlement.
Many students complained that they thought the credit was like a federal loan and would not be due until six months after they graduated, according to the settlement.
ITT filed for bankruptcy in September 2016 amid investigations by several state attorneys general for allegedly steering students into predatory loans and engaging in fraud and deceptive marketing practices. A federal crackdown on for-profit colleges led ITT to lose access to federal student aid, and the school closed down more than 100 campuses, including ones in Arlington, Oak Brook, Orland Park and Springfield, according to the settlement.
More than 80% of PEAKS loan borrowers were expected to default, according to the settlement.
As part of the settlement, PEAKS has agreed to cancel outstanding loan balances for all affected former students, including fees, charges and interest, and will cease doing business.
More than 35,000 former students nationwide will get debt relief under the settlement, and about 43,000 loans will be discharged, the attorney general’s office said in a news release Tuesday. PEAKS will notify borrowers of the canceled debt.
In June 2019, Illinois announced about 500 former ITT students were eligible for about $4.5 million in debt relief as part of a nationwide settlement with student loan lender Student CU Connect CUSO.
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