Attorney General Chris Carr has helped secure an agreement to get nearly $10 million in debt relief for former ITT Tech students in Georgia as a part of a settlement with 47 other attorneys general and therefore the federal Consumer Financial Protection Bureau.
“This settlement provides debt relief to Georgia students and holds PEAKS Trust in charge of its role in subjecting ITT students to abusive lending practices,” said Attorney General Carr.
Nationally, the settlement will end in debt relief of about $330 million for 35,000 borrowers who have outstanding principal balances.
The settlement is with PEAKS Trust, a personal loan program travel by the for-profit college and affiliated with Deutsche Bank entities. ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to limit ITT’s access to federal student aid. PEAKS was formed after the 2008 financial crisis when private sources of lending available to for-profit colleges dried up. ITT developed an idea with PEAKS to supply students temporary credit to hide the gap in tuition between federal student aid and therefore the full cost of the education.
When the temporary credit became due, ITT pressured and coerced students into accepting loans from PEAKS, which for several students carried high interest rates, far above rates for federal loans. Pressure tactics employed by ITT included pulling students out of sophistication and threatening to expel them if they didn’t accept the loan terms. Many of the ITT students were from low-income backgrounds and were left with the selection of enrolling within the PEAKS loans or throwing in the towel and losing any advantage of the credits that they had earned, because ITT’s credits wouldn’t transfer to most faculties .
Closed School Loan Discharge program
This discharge program is for former ITT Tech students now looking for student loan forgiveness options.
You might be qualified for a closed school discharge if you did not complete your education in an ITT school because they were closed while you were attending or soon after you withdrew. A closed school loan discharge is a 100 % discharge of the federal Direct Loans, Federal Family Education Loan Program loans, or Federal Perkins Loans you took out to attend the closed school and recompense of payments you have already made.
To apply for student loan forgiveness through a Closed School Discharge program, you can either
– complete and return the Closed School Loan Discharge Application sent to you by your servicer,
– complete a Closed School Loan Discharge Application and return it to your loan servicer, or
– contact your loan servicer about the application process to discharge your loan.
However, students that transfer their credits to another institution would no longer be qualified. Under the Closed School Discharge program, loan amounts forgiven are treated as taxable income and may trigger a substantial tax burden.
Borrower’s Defense to Repayment Discharges
On Thursday, December 13th, 2018 the Department of Education announced that they’re immediately approving $150,000,000 in Borrower’s Defense to Repayment Discharges (BDAR). It includes discharges for people who attended ITT Tech.
The sanctions of the Education Department on Carmel-based ITT Educational Services Inc. have laid support for past students. The goal is to take advantage of this little-known rule, called defense to repayment, which can wipe out their loans.
The defense to repayment rule falls under the U.S. Higher Education Act. It has existed for years but drew little attention until recently.
In the case of ITT Tech, who faces massive lawsuits and $560,000,000 reimbursement in response to their violations for committing illegal behavior against students just like you, Borrower’s Defense Discharges are readily available.
The best thing about BDAR discharges is that they can completely eliminate your loans. It means you won’t have to pay for student loans, but there’s another added benefit as well: you may even be likely to get a refund for the money you’ve already paid back.
Federal law gives the Education Department discretion to forgive student loans for those who claim they were deceived or that their college broke state laws. The government essentially made the claim that ITT has done that.
Thus, they have invited former students to request what could amount to hundreds of millions of dollars in student loan forgiveness. The rule applies to all previous students with federal loans. However, this does not cover private student loans.
In the meantime, the Education Department is encouraging borrowers to email their claims. Instructions are on the Education Department’s website.