- Office of Attorney General Maura Healey
Media Contact for Ag Healey Announces $5.6 Million in Debt Relief to Former ITT Tech Students in Massachusetts
Boston — A private lender that specialized in making loans to students at the now defunct for-profit ITT Technical Institute will cancel more than $5.6 million worth of debt for nearly 600 Massachusetts students, Attorney General Maura Healey announced today.
Under the terms of an assurance of discontinuance to be filed Suffolk Superior Court, PEAKS Trust will forego collection of outstanding loans and issue no new loans to student borrowers. PEAKS’s loan servicer 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,” said AG Healey. “This settlement demonstrates our office’s work in making sure struggling student borrowers get the relief they deserve.”
Today’s settlement has been filed in conjunction with resolutions reached with 48 attorneys general offices against PEAKS totaling over $330 million, providing debt relief to over 35,000 students nationwide. Under the terms of the agreement with the AG’s Office, PEAKS will cease operations in Massachusetts and nearly 600 students will receive an average of approximately $9,395 in debt relief.
The AG’s Office alleges that ITT, with PEAKS’s knowledge, offered students temporary credit upon enrollment to cover the gap in tuition between federal student aid and the full cost of an ITT education. Students were required to repay this temporary credit during their next academic year, but most were unable to repay the debt that quickly.
In those instances, ITT often allegedly pulled students out of class and threatened to expel them if they did not refinance their debt with a high-interest PEAKS loan. Because ITT credits would not transfer to most other schools, these students could not transfer to another institution and had little choice but to sign up for PEAKS financial products. Students could not afford these high-cost PEAKS loans, and the default rates were extremely high. The loans, usually not dischargeable in bankruptcy, devastated student credit ratings after the students were, predictably, not able to make their monthly payments.
AG Healey’s lawsuit against ITT, filed in April 2016, continues both in Superior Court and in federal bankruptcy court. AG Healey was also part of a similar multistate settlement against another private ITT lender last year.
Students with questions about their rights under the settlement should call Attorney General Healey’s Student Loan Assistance Unit, at 1-888-830-6277, ext. 2.
This investigation was handled by the staff of AG Healey’s Insurance and Financial Services Division, including Assistant Attorney General Diana Hooley, and Division Chief Glenn Kaplan.
In addition to Massachusetts, this settlement was signed by the attorneys general of Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.