Attorney General Steve Marshall Announces $2.3 Million in Debt Relief for Eligible Former ITT Students in Alabama from National Settlement with Loan Company
(MONTGOMERY)—Attorney General Steve Marshall announced today that approximately 289 former Alabama students of ITT Technical Institute will receive $2.3 million in debt relief as part of a national multi-state settlement with the loan company Student CU Connect CUSO LLC, known as CUSO. The defunct for-profit college had schools in Madison, Bessemer and Mobile as well as those in other states.
Nationally, the settlement will result in debt relief of more than $168 million for more than 18,000 former ITT students. CUSO provided loans to finance students’ tuition at ITT, which suddenly closed in April of 2016. ITT filed for bankruptcy later that year amid investigations by state Attorneys General and following action by the U.S. Department of Education to restrict ITT’saccess to federal student aid. The CUSO Loan program originated approximately $189 million in student loans to ITT students between 2009 and 2011.
Under threat of litigation, CUSO agreed in the settlement that it will forego collection of outstanding loans. The affected former students are those who still have outstanding debt from loans with CUSO. They will receive formal notice from CUSO’s loan servicer and do not need totake any action. Their debt will be immediately vacated and any automatic payments will be cancelled. CUSO will notify credit reporting agencies of this action for updating their records. CUSO, which was organized for the sole purpose of providing the ITT loans, will also cease doing business.
“The manner in which students were strong-armed into taking out loans with this company and the misleading information they received is outrageous,” said Attorney General Marshall. “CUSOnow is being held to account for its participation
The Attorneys General allege that ITT, with CUSO’s knowledge, offered students TemporaryCredit (TC) upon enrollment to cover the gap in tuition between federal student aid and the full cost of the education. What students were not told was that this TC would come due for repayment before the student’s next academic year, although ITT and CUSO knew or should haveknown that most students would not be able to repay the TC at that time. Many students thought the TC was like a federal loan and would not be due until six months after they graduated.