Former Nevada students of the bankrupt ITT Technical Institute will get $6.2 million in debt relief under a national $330 million judgment announced Thursday.
Nevada was one of 48 states settling with PEAKS Trust, an affiliate of Deutsche Bank that was lending to former students at the for-profit college.
“Thousands of Nevada students have been duped by PEAKS Trust’s mounting interest rates and predatory practices,” said Nevada Attorney General Aaron Ford in a statement. His office said 687 former students would see debt relief under the settlement.
An “Assurance of Voluntary Compliance” agreement signed by the Nevada Attorney General’s office and an attorney for Deutsche Bank describes ITT’s business model as preying on low-income students who could not cover the difference between ITT tuition rates and federally available loans.
PEAKS had only one clientele of borrowers, ITT students, and the money could only be spent to pay ITT. The for-profit college “coerced” students into borrowing more money than they could afford to repay, the agreement states.
According to the attorney general’s office, PEAKS must notify borrowers that their debt has been canceled, and also cancel automatic payments. Under the settlement, PEAKS must also inform credit agencies that the borrowers’ debts have been canceled.
Last year former Nevada ITT Tech students benefited from a similar settlement with another lender, CUSO, LLC. Under that June 2019 settlement, 335 former students got $3.4 million in debt relief.
ITT was only one of several for-profit schools, many also now defunct, that have been taken to task for saddling students with debt on the one hand, and worthless degrees on the other. Some of them were giant, like Corinthian College, which left hundreds of thousands of students in debt and but an education of little value after it closed. Others were smaller, such as Brightwood College, which closed down in Southern Nevada after losing its accreditation.
With consumer protection claims piling up from students who had been enrolled in for-profit colleges, the Obama administration had set up a system of loan forgiveness in cases of institutional misconduct. But Trump administration Education Secretary Betsy DeVos rewrote the Obama-era rule.
The House and Senate both voted to overturn the DeVos reversal of the Obama so-called “borrower defense” rule, but failed to override a presidential veto.