BATON ROUGE, La. (Office AG Landry) - Attorney General Jeff Landry announced Friday 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 42-state and the District of Columbia 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.
Copyright 2019 AG Jeff Landry. All rights reserved.