Former ITT Tech students file class action against the company
The Background of Borrower Defense to Repayment
Borrower Defense to Repayment (BDR) is a federal regulation designed to Safeguard Student Borrowers who have been defrauded by educational institutions. Under this program, borrowers may be Eligible For Loan Forgiveness if their school misled them about key aspects such as accreditation, employment prospects, or program costs. The downfall of ITT Technical Institute highlights the critical role of BDRin addressing systemic issues within the for-profit education sector.
The Genesis of the ITT Technical Institute’s
$7.3 Billion class action Lawsuit
ITT Technical Institute, once a prominent name in the for-profit education sector, began to unravel amid mounting allegations of fraud and misrepresentation. The class action lawsuit, valued at $7.3 billion, emerged as a result of years of deceptive practices, including exaggerated job placement rates, misrepresented program quality, and aggressive recruitment tactics targeting vulnerable populations. The lawsuit sought to provide justice to over 750,000 former students burdened with unmanageable debt.
ITT Technical Institute Bankruptcy
In 2016, ITT Technical Institute abruptly filed for bankruptcy, marking the end of its operations and leaving thousands of students in academic and financial limbo. The institution’s closure underscored the risks of for-profit education models reliant on Aggressive Recruitment and Federal Financial Aid, leaving Students Burdened With Debt And Limited Academic Options. The reasons for the bankruptcy can be summarized as:
Escalating Legal Challenges: ITT faced numerous lawsuits and regulatory actions, including allegations of predatory lending and deceptive marketing.
Federal Sanctions: The Department of Education imposed restrictions on ITT’s access to federal student aid, which was a primary revenue source for the institution.
Declining Enrollment: Negative publicity and increased scrutiny led to a sharp decline in student enrollment.
Financial Mismanagement: Bankruptcy proceedings revealed mismanagement of funds, with ITT struggling to meet operational costs and financial obligations.
ITT Technical Institute, Daniel Webster College bankruptcy class action settlement
Major Allegations Against ITT Technical Institute
ITT Technical Institute’s reputation began to crumble under the weight of numerous allegations that highlighted systemic misconduct. These allegations included:
Deceptive Recruitment Practices: The institution used aggressive tactics to target low-income individuals and veterans, often pressuring them to enroll without fully disclosing program details.
Misleading Financial Aid Information: ITT was accused of coercing students into taking high-interest private loans while downplaying the risks involved.
Substandard Educational Quality: Many students and regulators alleged that ITT failed to provide the promised level of education and training, leaving graduates unprepared for their fields.
Program Costs & Nature of Loans:ITT Tech has been implicated in misleading students regarding the nature of their financial aid, particularly concerning the types of loans and the availability of grants and scholarships.
Consumer Financial Protection Bureau (CFPB) Lawsuit (2014)
Allegations: The CFPB sued ITT Tech, alleging that the institution encouraged students to enroll by suggesting that most of their tuition would be covered through federal aid or grants. However, after enrollment, many students discovered they were ineligible for such aid and were coerced into taking out high-interest private loans to cover the shortfall. The CFPB described these practices as unfair and abusive, asserting that ITT Tech pushed students into loans that were likely to default.
Outcome: In 2019, a settlement was reached to resolve the lawsuit, with ITT Tech agreeing to a judgment ordering restitution; however, due to ITT's bankruptcy, the CFPB agreed to forgo collection of this judgment. consumerfinance.gov
Multi-State Settlement (2018)
Allegations: A coalition of state attorneys general investigated ITT Tech for misleading students about the availability of financial aid. The investigation found that ITT misrepresented the nature of federal loans and grants, leading students to believe they qualified for aid that was not actually available to them. Consequently, students were forced into taking private loans with unfavorable terms.
Outcome: The investigation resulted in a $330 million settlement to discharge outstanding loans for former ITT Tech students. oag
Major Lawsuits of the ITT Technical Institute
ITT Technical Institute faced numerous legal battles prior to its closure in 2016. Key lawsuits include:
U.S Department of Education: Education Department approves $3.9 billion group discharge for 208,000 borrowers who attended ITT Technical Institute.
State Attorney General Investigations: Multiple state attorneys general, including those from Massachusetts and New Mexico, filed lawsuits citing misleading advertising, inflated job placement rates, and inadequate education quality.
Key Outcomes of the ITT Technical Institute’s $7.3
Billion class action Lawsuit
The $7.3 billion settlement, finalized in 2022, provided significant relief to former ITT students. Key outcomes included:
Debt Forgiveness: The settlement discharged $3.9 billion in federal student loans for eligible borrowers.
Restitution Payments: Affected students received direct payments to compensate for their financial losses.
Policy Reforms: The case prompted stricter oversight of for-profit institutions and enhanced transparency requirements to prevent similar misconduct in the future.
The Impact of ITT Technical Institute’s
$7.3 Billion class action Lawsuit
The lawsuit’s impact extended beyond the immediate Financial Relief For Students. It served as a cautionary tale for other for-profit institutions, spurring regulatory reforms and increased scrutiny of the sector. The case also empowered Student Borrowers To Advocate For Their Rights and raised awareness about the importance of making informed decisions when choosing educational institutions.
Report On Fraud Committed By ITT Technical Institute Highlights
Need To Protect Student Loan Borrowers With Stronger Regulation Of For-Profit Colleges
Missed Deadlines: Submitting an application after the deadline or failing to adhere to filing timelines can disqualify claims. Contact Legal Touch Borrower Defense to meet deadlines.
Ineligible Claims: Applications that do not clearly demonstrate how the school’s actions violated borrower protections may be rejected. Check your eligibility today.
Lack of Specificity: General complaints without detailed examples of misrepresentation or fraud are less likely to be approved. Download our free eBook for help.
School Not Found Guilty: Claims related to institutions not proven to engage in deceptive practices or fraud are often denied. Contact focused consultants immediately.
Borrower Defense to Repayment: Your Path to Justice
If your school misrepresented itself, leaving you burdened with significant debt, the Borrower Defense to Repayment program offers a pathway to justice. Filing a Borrower Defense application, you can seek financial relief and ensure institutions are held accountable. Here are the key reasons to consider taking action:
Loan Forgiveness: Erase student loans linked to fraudulent school promises and deceptive practices.
Financial Freedom: Regain control over your finances.
Accountability: Ensure deceptive institutions are held responsible.
Future Opportunities: Free yourself to pursue further education or a new career path.
Access to Additional Support: Engage with experts and resources to strengthen your case.
Take Action Today
Why Use Us?
Don’t let school misrepresentation and lies ruin your future. Here’s how to get started:
The downfall of ITT Technical Institute and the landmark $7.3 billion class action lawsuit represent a groundbreaking moment for Borrowers Defrauded By For-Profit Institutions. This settlement not only delivered critical debt relief to thousands of former students but also underscored the systemic flaws in the for-profit education model.
If you believe you were misled or defrauded by ITT or a similar institution, Now Is The Time To Act. Strengthened Borrower Defense protections are in place to help you seek justice and build a brighter financial future.
