By Michael Bonner Mass Live Staff | September 15, 2020
As part of a nationwide settlement, about 600 former ITT Tech students in Massachusetts will have more than $5.6 million of loan debt canceled, Attorney General Maura Healey announced on Tuesday.
Resolutions were reached with 48 attorneys general offices that will affect more than 35,000 students nationwide who were granted more than $330 million in loans from PEAKS Trust. The total amount of student loan debt will be canceled.
As part of the settlement, PEAKS Trust will forego collection of outstanding loans and issue no new loans to student borrowers. PEAKS will send notices to eligible borrowers about the cancelled debt and ensure that all automatic payments are cancelled. PEAKS is also required to supply credit reporting agencies with information to update credit information for affected borrowers.
“Students looking to further their education received nothing but low-quality programs from ITT Tech and were forced into high-interest loans they couldn’t afford to pay,” Healey said in a statement. “This settlement demonstrates our office’s work in making sure struggling student borrowers get the relief they deserve.”
The attorneys general alleges that ITT Tech, with PEAKS’ knowledge, offered students loans upon enrollment to cover the gap between federal student aid and the full cost of tuition. Students were required to repay the loan during their next academic year.
ITT Tech often pulled students out of class and threatened to expel them if they did not refinance their debt with a high-interest PEAKS loan, the attorney general’s office said. ITT Tech credits would not transfer to most other schools, leaving students little choice but to sign up for PEAKS financial products, Healey’s office said.
The default rates of the high-cost PEAKS loans were extremely high, the attorney general’s office said. The loans, usually not dischargeable in bankruptcy, devastated student credit ratings after the student not able to make their monthly payments.
A suit filed by Healey against ITT Tech in 2016 remains in both Superior Court and in federal bankruptcy court. Healey was also part of a similar multistate settlement against another private ITT lender last year.
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