ITT students to get $20M in debt relief
AUSTINTOWN — The Ohio Attorney General’s office has secured $20.6 million in debt relief for former ITT Technical Institute students in the state as part of a nationwide settlement with 47 other attorneys general and the U.S. Consumer Financial Protection Bureau.
The company that operated ITT abruptly shut the doors at all its campuses, including in Austintown on Meridian Road, on Sept. 6, 2016, after the U.S. Department of Education banned it from enrolling new students who used federal financial aid.
The settlement is with PEAKS Trust, a private loan program run by the for-profit college and affiliated with Deutsche Bank entities.
PEAKS formed after the 2008 financial crisis when private sources of lending available to for-profit colleges dried up. ITT developed a plan with PEAKS to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education.
According to the settlement, when the temporary credit became due, ITT pressured students into accepting loans from PEAKS, which for many students carried interest rates far above rates for federal loans.
PEAKS has agreed to forgo collection of the outstanding loans and cease doing business, will send notices to borrowers about the canceled debt and ensure that automatic payments are canceled. The settlement also requires PEAKS to supply credit reporting agencies with information to update credit information for affected borrowers.