Georgians who racked up large student loan debt while attending the now-closed ITT Technical Institute are set for nearly $10 million in debt relief through a settlement agreement announced Wednesday.
Georgia Attorney General Chris Carr, who joined 47 other state attorneys general to secure the settlement with the private loan program PEAKS Trust, said the agreement struck this week would compensate former ITT Tech students for “abusive lending practices.”
Nationwide, the settlement is poised to result in debt relief of around $330 million for 35,000 borrowers who took out loans with PEAKS Trust to finance schooling at the for-profit ITT Tech.
In a news release, Carr’s office outlined how temporary student credits offered by PEAKS were the preferred lending instrument promoted by ITT Tech to help students pay for their education.
Many students believed the PEAKS credits were supposed to act like typical student loans that become due six months after graduation. Instead, these credits were due nine months after they were secured, leaving students unable to pay them back so quickly.
These students often came from low-income backgrounds and were “pressured and coerced” by ITT Tech to take out the PEAKS credits, which carried very high interest rates, the news release said. ITT Tech at times threatened to expel students if they did not accept the credit terms.
Ultimately, ITT Tech filed for bankruptcy in 2016 amid a mounting default rate on the PEAKS credits that is expected to exceed 80%. PEAKS Trust has agreed under the settlement to forgo collecting on the outstanding credits and to cease doing business, according to the news release.
This week’s settlement followed an agreement reached last year with a separate loan program, Student CU Connect CUSO, LLC, which resulted in $168 million in debt relief for about 18,600 ITT Tech students. Carr’s office was also part of that prior settlement.