Utah Announces $4.4M In Loan Forgiveness Settlement For Students Of Defunct ITT Tech
MURRAY, Utah – Officials with Utah’s Division of Consumer Protection said people who attended the now-defunct ITT Technical Institute could soon have their student loans forgiven.
On Tuesday, the agency announced a $4.4 million settlement in canceled loans for Utah students of the for-profit school over predatory student loans.
The settlement is with PEAKS Trust, a private loan program ran by Deutsche Bank and ITT Tech. It was created back in 2008, when the Great Recession wiped away much of the lending students could get for attending for-profit programs like ITT Tech.
So, when federal financial aid was cut back, regulators from the Utah Division of Consumer Protection said the school and its financial partners signed students onto PEAKS loans to fill in the gap. But when those loans came due nine months later, students were given an ultimatum: Either pay off their tuition by borrowing money from a high-interest PEAKS loan or pack their bags.
“The situation here is students getting coerced into high-interest loans that ITT and PEAKS knew, or should have known, from the outset were not going to be repaid,” said Daniel O’Bannon, director of the Utah Division of Consumer Protection.
Most students who got those loans have been unable to pay and many have had their credit wrecked.
“At the end of the day, there’s a default rate of around 80% on these loans, which is massive, terrible,” said O’Bannon.
Utah’s settlement money is part of a larger, national settlement brought by the federal Consumer Financial Protection Bureau. It will relieve all remaining student debt for folks who got one of these loans.
But if you have already paid off your ITT Tech student loan through PEAKS, O’Bannon said you will not get any help from this settlement. It’s only for those who have current debt with PEAKS.
If you’re someone who has student debt with PEAKS Trust and you attended ITT Tech, you do not need to do anything, yet, to receive loan forgiveness. You should be receiving something in the mail shortly with details.