More than 1,000 former Illinois students who attended the for-profit college ITT Technical Institute could be eligible to receive more than $9.4 million in student debt relief, according to the attorney general’s office.
The loan forgiveness is part of a $330 million national settlement reached by 46 states, the District of Columbia and the Consumer Financial Protection Bureau with Peaks Trust, a private loan servicer.
Peaks, established in 2009 to handle private loans for ITT students, offered students at the now-defunct college a temporary credit to cover tuition not funded by federal aid programs, according to the settlement agreement.
Peaks acknowledged as part of the settlement that he knew or should have known that the students would not be able to repay the credit when it fell due nine months later. He acknowledged that when they couldn’t pay it back on time, students were forced to take out a loan from Peaks that typically had higher interest rates than federal student loans or risk expulsion, depending on the regulations. .
Many students complained that they thought the credit looked like a federal loan and would not be due until six months after graduation, according to the regulations.
ITT filed for bankruptcy in September 2016 amid investigations by several state attorneys general for allegedly directing students into predatory loans and engaging in fraud and deceptive marketing practices. A federal crackdown on for-profit colleges led to ITT losing access to federal student aid, and the school closed more than 100 campusesincluding those in Arlington, Oak Brook, Orland Park and Springfield, depending on the settlement.
According to the settlement, more than 80% of Peaks borrowers are expected to default.
As part of the settlement, Peaks has agreed to cancel outstanding loan balances for all affected former students, including fees, charges and interest, and will cease doing business.
More than 35,000 former students nationwide will receive debt relief under the settlement, and about 43,000 loans will be forgiven, the attorney general’s office announced Tuesday. Peaks will notify borrowers of canceled debt.
In June 2019, Illinois announced that approximately 500 former ITT students were eligible for approximately $4.5 million in debt relief as part of a nationwide settlement with student lender Student CU Connect. CUSO.