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CFPB settles ITT Ed Services loan program suit
The CFPB has announced a proposed settlement with ITT Educational Services, Inc., to resolve the Bureau’s lawsuit, which alleges that ITT engaged in unfair and abusive practices in connection with its private loan program in violation of the Consumer Financial Protection Act of 2010. The suit, which was brought in 2014, alleges that ITT helped to create private loan programs for students at ITT Technical Institute, the school run by ITT until it filed for bankruptcy and ceased operations in 2016. The Bureau also alleges that ITT improperly induced students to take out those loans to pay the tuition amounts not covered by loans or other tuition assistance from the federal government. The Bureau’s complaint also alleges that ITT knew that the student borrowers did not understand the terms and conditions of the loans and could not afford them, resulting in high default rates and other negative consequences.
The proposed settlement includes a judgment against ITT for $60 million and an injunction barring ITT from offering or providing student loans in the future.
In a separate action filed by the Bureau on June 14, 2019 (see our June 17 Top Story), a final stipulated judgment was entered against the entity holding the private loans at issue, Student CU Connect CUSO, LLC. Under the terms of that judgment all collection on such loans must cease, all outstanding loans must be discharged, and all negative credit reporting must be corrected.