TOPEKA – (September 16, 2020) – Nearly 300 former ITT Tech students from Kansas will receive more than $2 million in education loan relief as part of a settlement agreement between Kansas and a private lender at the failed for-profit college, Attorney General Derek Schmidt said.
The settlement released Tuesday between Kansas, 47 other states and PEAKS Trust will result in about $330 million in debt relief for 35,000 borrowers nationwide who have outstanding principal balances, with 290 Kansans receiving $2,015,269.84 in relief. PEAKS is affiliated with Deutsche Bank entities. ITT filed bankruptcy in 2016 amid investigations by state attorneys general and action by the U.S. Department of Education to restrict access to federal student aid. ITT had campuses in Wichita and the Kansas City metro.
“This settlement provides meaningful relief to Kansas student borrowers who were induced to undertake these loans through means that violated Kansas law,” Schmidt said.
The agreement states the ITT and PEAKS should have known that the students would not be able to repay the temporary credit when it became due nine months later. Many students complained that they thought the temporary credit was like a federal loan and would not be due until six months after they graduated. When the loan came due, however, ITT pressured and coerced students into accepting loans from PEAKS, which for many students carried higher interest rates, far above federal loans.
PEAKS was formed after the 2008 financial crisis when private sources of lending available to for-profit colleges evaporated. ITT created a lending program with PEAKS to offer students temporary credit to cover the gap in tuition between federal student aid and the cost of tuition.
Under the settlement, PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business. PEAKS will send notices to borrowers about the cancelled debt and ensure that automatic payments are cancelled. The settlement also requires the PEAKS to supply credit reporting agencies with information to update credit information for affected borrowers. Former students who are eligible for relief are not required to take any action; their debts will be canceled automatically, and they will be notified.
Students with questions about their rights under the settlement will receive information in the notices that are sent. Students may also visit www.InYourCornerKansas.org or call the attorney general’s Consumer Protection Division at (800) 342-2310 for more information.
This is the third settlement Schmidt’s office has obtained that provides student-loan relief for former students of for-profit colleges in Kansas. In January 2019, the office secured an agreement that provided more than $2 million in debt relief for 1,077 former students of online provider Career Education Corporation, and in June 2019 Attorney General Schmidt was part of a settlement that resulted in more than $1million in loan relief to 108 ITT students. The June agreement was with Student CU Connect CUSO, LLC, which also offered loans to finance students’ tuition at ITT Tech.
A copy of the PEAKS/Deutsche Bank settlement agreement is available at https://bit.ly/2Rz0pe8.