North Carolina Attorney General Josh Stein announced a multistate settlement with private lender Student CU Connect CUSO LLC (CUSO) that will result in more than $168 million in debt relief for more than 18,000 former ITT Technical Institute (ITT Tech) students. In North Carolina, 412 borrowers will receive $4,257,783.11 in loan relief. The settlement resolves allegations that ITT and CUSO, a private loan program that ITT developed, deceived students into accepting private high-interest loans.
“As Attorney General, it’s my job to protect students and ensure they can safely invest in their futures,” said Attorney General Josh Stein. “Today’s settlement will give these students the debt relief they need for a fresh educational start and a future unhindered by these debts. My office will continue our work to protect students from predatory, for-profit schools that prey on their hopes and dreams.”
When students enrolled at ITT, the school deceptively offered them a “temporary credit” to cover the remaining tuition owed after federal student aid was applied. When students were unable to repay the credit before the next academic year began, ITT offered them a high-interest CUSO loan without sharing the true cost of repayment. Most of the students did not want these loans and could not have repaid them in time, but ITT used high-pressure tactics including threats of expulsion to force students to accept them.
Approximately 90 percent of CUSO borrowers ultimately defaulted on their loans – due to a combination of the high costs of the loans and the lack of success that ITT graduates had getting well-paying jobs. These defaulted loans continue to affect borrowers’ credit ratings and are usually not dischargeable if a borrower declares bankruptcy.
As part of the settlement with 43 states and the District of Columbia, CUSO has agreed to cease operation, cancel all of its private loans, and work with credit reporting agencies to remove these debts from borrowers’ credit reports. ITT filed for bankruptcy in 2016 following investigations by multiple states, including North Carolina, and federal action from the U.S. Department of Education to restrict ITT’s access to federal student aid.
Former students that will benefit from this settlement do not have to do anything – they will be ed directly with notice of their debt relief by CUSO representatives.
Attorney General Stein is joined in today’s settlement by the Attorneys General of Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin, and the District of Columbia.
A copy of the settlement is available here.