RICHMOND, Va. - Attorney General Mark Herring has announced more than $9 million in debt relief for former ITT Technical Institute students in Virginia.
Herring made the announcement Friday that he secured $9.29 million in debt relief for nearly 1,000 former ITT students in Virginia as a part of a settlement that included 43 states, according to his office.
Nationally, the settlement will result in debt relief for more than 19,000 former ITT students, totaling more than $168 million.
There is also a related settlement between the CUSO Loan program, which originated about $189 million in student loans to ITT students from 2009 to 2011, and the federal Consumer Financial Protection Bureau.
ITT filed for bankruptcy in 2016 amid investigations by state attorneys general and after action by the U.S. Department of Education to restrict the for-profit school's access to federal student aid. The school closed locations nationwide, including in Salem and four others across the commonwealth.
The attorneys general alleged that ITT offered students "temporary credit" with CUSO's knowledge at the time of enrollment to cover the gap between federal student aid and the full cost of education.
The credit was reportedly was due to be repaid before the student's next academic year, although the attorneys general say ITT and CUSO knew or should have known that most students would not be able to repay. Many students complained, saying they thought the temporary credit would not be due until six months after graduation, just like federal student loans.
When the credit repayment became due, ITT allegedly pressured and coerced students into accepting high-interest loans from CUSO.
The settlement says pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the terms of the loan. Most students accepted the CUSO loans because they felt they had no choice.
According to Herring's office, neither ITT or CUSO told students the true cost of the repayment for the temporary credit until after the credit was converted to a loan. His office says the default rate on the loans was projected to exceed 90% due to high costs and lack of success ITT graduates had with securing jobs that made repayment possible.
Under the settlement, CUSO has reportedly agreed to forego collection of outstanding loans and will cease doing business.
The settlement also requires CUSO's loan servicer to send notices to borrowers about the canceled debt, ensure automatic payments are canceled and requires them to supply credit reporting agencies with information to update credit information for affected borrowers.
Anyone with questions should contact Herring's Consumer Protection Section by phone at 800-552-9963 or by email at email@example.com.
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