BATON ROUGE, LA – Attorney General Jeff Landry today announced that his
office has secured an agreement to obtain $2,818,341.38 in debt relief for 285
former ITT Tech students in Louisiana as part of a 43-state settlement with Student CU Connect CUSO, LLC (CUSO), which offered
loans to finance students’ tuition at the failed for-profit college.
“As Attorney General, I am committed to protecting
Louisiana citizens from unfair and deceptive business practices,” said General
Landry. “This settlement holds CUSO accountable for its participation with ITT
in subjecting students to abusive lending practices, and it provides relief to
hundreds of Louisiana families who incurred debts for questionable education
that they could not repay nor discharge.”
ITT filed bankruptcy in 2016 amid investigations by
State Attorneys General and following action by the U.S. Department of
Education to restrict ITT’s access to federal student aid. The CUSO Loan
program originated approximately $189 million in student loans to ITT students
between 2009 and 2011.
General Landry and his colleagues alleged that ITT, with
CUSO’s knowledge, offered students Temporary Credit (TC) upon enrollment to
cover the gap in tuition between federal student aid and the full cost of the
education. While many students thought the TC was like a federal loan and
would not be due until six months after graduation, the TC was due to be repaid
before the student’s next academic year. When the TC became due, ITT deployed
pressure tactics, including pulling students out of class and threatening to
expel them to coerce acceptance of loans with extremely high interest rates.
Not surprisingly, the default rate on the CUSO loans was extremely high. The
defaulted loans continue to affect students’ credit ratings and are usually not
dischargeable in bankruptcy.
Under the threat of litigation, the CUSO has agreed to
forego collection of the outstanding loans and cease doing business. CUSO’s
loan servicer will send notices to borrowers about the cancelled debt and
ensure that automatic payments are cancelled. The settlement also
requires the CUSO to supply Credit Reporting Agencies with information to
update credit information for affected borrowers.
Nationally, the settlement will result in over $168
million in debt relief for more than 18,000 former ITT students. Students
with questions about their rights under the settlement will receive information
in the Notices that are sent. Students may also contact the Consumer Financial
Protection Bureau at (855) 411-2372.
In addition to this settlement, General Landry obtained
$3,436,754.25 in debt relief for 1,815 former students of Career Education
Corp. in a January 2019 settlement.
Joining Louisiana Attorney General Jeff Landry in the
CUSO settlement were the Attorneys General from Alabama, Arizona, Arkansas,
Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire,
New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon,
Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont,
Virginia, Washington, West Virginia, and Wisconsin.