INDIANAPOLIS – More than 1,300 former ITT Technical Institute students will receive a settlement for more than $10 million in debt relief.
The settlement is with PEAKS Trust, a private loan program run by the for-profit college and affiliated with Deutsche Bank entities. PEAKS was formed after the 2008 financial crisis.
Indiana Attorney General Curtis Hill’s office said ITT pressured students into accepting loans from PEAKS with high interest rates. Pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the loan terms, the office said.
The default rate on the PEAKS loans is projected to exceed 80%, due to both the high cost of the loans as well as the lack of success ITT graduates had getting jobs that earned enough to make repayment feasible.
“This settlement ensures that former ITT Technical Institute students are no longer subjected to the abusive lending practices of PEAKS Trust,” Hill said. “This program, like ITT before it, is now defunct. We hope this result eases the financial stress that so many former students have undoubtedly endured.”
Under the settlement, PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business. It will also send notices to borrowers about the canceled debt and ensure that automatic payments are cancelled.
About 35,000 borrowers across the country will get debt relief of about $330 million.