More than 1,300 former ITT Technical Institute students from Indiana will see relief from a $10 million settlement against PEAKS Trust, a private loan program.
Indiana Attorney General Curtis Hill says the agreement is part of a $330 million settlement in partnership with 46 other states, the District of Columbia and the federal Consumer Financial Protection Bureau.
ITT Technical, a division of Carmel-based ITT Educational Services Inc., developed a plan with PEAKS to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education.
But Hill says when the temporary credit became due, ITT pressured and coerced students into accepting loans from PEAKS, which for many students carried high-interest rates.
The state attorney general says pressure tactics included pulling students out of class and threatening to expel them if they did not accept the loan terms.
“This settlement ensures that former ITT Technical Institute students are no longer subjected to the abusive lending practices of PEAKS Trust,” said Hill.
PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business.
Hill says PEAKS will send notices to borrowers about the canceled debt and ensure that automatic payments are canceled.
For-profit ITT Technical Institute closed in September 2016. It operated over 130 U.S. schools, including five campuses in Indiana.
“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,” said Hill.
ITT Educational Services filed for bankruptcy in September 2016.