ITT Educational Services, Inc.
Enforcement, Student Loans
In 2014, the CFPB sued ITT Educational Services, “one of the nation’s largest for-profit college chains,” over “predatory lending practices, pushing prospective students into costly loans and misleading them about future job prospects.”_ The case, which is still open, seeks a civil penalty, restitution for consumers, and an end to the practices utilized by ITT.
CFPB accused ITT Educational Services “of pushing students into predatory loans without properly explaining what they were signing up for,” some of whom “did not even realize they had taken out the loans until they received calls from collection agencies.” Since many credits received “did not transfer to many other schools,” ITT would leverage students’ educations against them, threatening “expulsion and the loss of money already spent on a first year to ‘coerce’ students into taking out more loans.” ITT even “projected that 64 percent of its students would default on those loans.” [Tim Devaney, “For-profit schools hit with lawsuit,” The Hill, 02/27/14]
The CFPB alleged that “ITT encouraged new students to enroll at ITT by providing them so-called ‘tuition gap’ funding with a zero-interest loan called ‘Temporary Credit.’ This loan typically had to be paid in full at the end of the student’s first academic year,” even though, according to the lawsuit, ITT knew “that many students would not be able to repay their balances or fund their next year’s tuition gap.” The CFPB also alleged “that between July and December 2011, ITT pushed students into repaying their temporary credit and funding their second-year tuition by taking out high-cost private student loans.” [Bruce Horovitz, “U.S. sues college chain ITT over loans”, USA Today, 02/27/14]
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