Villalba et al. v. ITT

Information for Former ITT Students

If you are a former student of ITT Tech, please visit this page for information and to sign up for updates.

Overview

Who is involved in this case?

The Project on Predatory Student Lending represents a group of former ITT Tech students who filed a claim against the estate of ITT in ITT’s bankruptcy proceedings. These former students sought to act as representatives of hundreds of thousands who attended and were defrauded by ITT Tech between 2006 and 2016. Along with the students, the CFPB and multiple state attorneys generals are parties in the bankruptcy proceedings.

 

Read more about one of our named plaintiffs in this case, Jorge Villalba, here. If you are a former student of ITT Tech, click here for information.

 

What is this case about?

In 2016, the Department of Education cut off federal student aid to ITT. Because almost all of ITT’s revenue came from federal student aid, it declared bankruptcy weeks later. In determining what would happen to the estate of ITT, it became clear that the students who had been preyed upon by ITT to build that estate needed to be part of the conversation. The Project intervened in ITT’s bankruptcy proceedings on behalf of former students, seeking to cancel the private student loan debt held by the estate of ITT.

 

Where was this case filed?

This case was filed in the southern district of Indiana.

 

When was this filed?

Students filed claims in the ITT bankruptcy on January 3, 2017.

Why this case?

ITT Tech was one of the country’s largest for-profit college chains. Over the past decade alone, it took in over $11 billion in revenue, 98% of which came from tuition, and 76% of which came from federal student aid. Headquartered in Carmel, Indiana, it grew at incredible rates after becoming a publicly traded entity in 1999, and came under increasing scrutiny for its recruitment practices. ITT was featured prominently in the Senate HELP Report of 2012, which detailed consumer fraud and misuse of federal funds at many for-profit colleges around the country. By the time it declared bankruptcy in late 2016, ITT had been subject to lawsuits by numerous state and federal enforcement agencies, as well as multiple whistleblowers.

Despite extensive evidence of illegal behavior, the Department of Education continues to collect on the federal student loans that funded ITT’s fraud.

The Latest

On November 28, 2018 the judge in the ITT bankruptcy case gave final approval to the settlement between the student class and the estate of ITT. The settlement is a big victory for former ITT students who were defrauded by the school and cancels $500 million in student debt supposedly owed to ITT, returned $3 million collected since the bankruptcy to former students, and gave students a $1.5 billion allowed claim against the bankruptcy estate. The bankruptcy case is ongoing.

“One employer told me that he had plenty of applications from potential candidates that had ITT Tech on their resume and that he would immediately discard those applications because he didn’t consider ITT Tech a real college.”

Former ITT Tech Student

“After graduating from ITT, I struggled with the stigma of having their name on my resume and I have gotten further with certifications than with having my degree on my resume. I have found that when ITT is mentioned most employers will frown upon it because of the previous employees they have had from ITT.”

Former ITT Tech Student

“When I graduated they made it seem like they would help me find a decent job. When in fact all they would help me get was jobs through a temp agency. When I started work I worked next to a kid who didn't even have a high school diploma. Made it seem like I wasted my time going to school I could have got the job with out them."

Former ITT Tech Student

Case Updates

A Reckoning with Private Loan Cancellation: Jorge Villalba’s Quest for Full Loan Cancellation | Blog

Jorge Villalba was one of tens of thousands of students scammed by ITT and was left with a worthless degree and insurmountable debt in the form of both federal and private student loans.  Now, after getting his federal loans discharged, he’s fighting to get his private loans cancelled too.

Update | CFPB and States Settlement with Private Loan Lender to Cancel Millions of Dollars in Student Loan Debt

As Betsy DeVos and the Department of Education issue blanket denials on borrower defense applications to former ITT students, the CFPB and a group of 44 states and the District of Columbia filed proposed settlements with one of ITT’s private lenders, known as PEAKS.

Statement on Legislative Plan to Cancel Fraudulent Corinthian and ITT Student Debt | Press Releases

Senators Durbin, Brown, and Warren, and Congressmembers Takano and Jayapal introduced a legislative plan to completely cancel the loans of borrowers who have long been deemed eligible for borrower defense discharge.

Case Documents

05/07/2019

Notice of Trustee's Motion to Compromise and Settle Adversary Proceeding Against the CUSO

On May 7, 2019, the Trustee filed a motion to settle its lawsuit against the CUSO, a credit union service organization that the Trustee alleged to have aided and abetted ITT’s former management’s fraudulent conduct in connection with the CUSO student loan program. According to the Notice, any objection to the Trustee’s motion must be in writing and filed with the Bankruptcy Clerk by June 5, 2019.

08/17/2018

Student Claimants' Supplemental Brief in Support of Order 2004

Student Claimants filed a supplemental brief requesting documents under rule 2004.

07/12/2018

Proposed Protective Order

Protective order filed by the Trustee describing the process by which access to certain documents, including student and business records, can be obtained.

Coverage

Former Students of Defunct ITT Tech Receive $95.1 Million Loan Relief | Wall Street Journal

WASHINGTON—The Education Department is providing loan relief to some 7,800 former students of the ITT Technical Institute, with debts totaling $95.1 million being forgiven by the government years after the giant for-profit school chain closed. The department said that it has identified 7,878 former students of ITT Tech as eligible for a program in which loans are discharged automatically within three years of a school closure. Of those borrowers who attended the school, 7,697 had received loan forgiveness as of Jan. 3.

Read More

Defrauded college students will no longer be taxed on their canceled loans | Washington Post

Student loan borrowers whose education debt has been canceled because their college closed or engaged in fraud will no longer face a tax bill, relief that arrives as applications for forgiveness continue to grow. On Wednesday, the Internal Revenue Service issued guidance shielding borrowers from having their discharged federal and private loans treated as taxable income. The measure is effective for education loans canceled on or after Jan. 1, 2016. Anyone affected by the new policy may claim a credit or refund for an overpayment of taxes.

Read More

Former for-profit college students will have $168 million in student debt cancelled | MarketWatch

More than 18,000 students who attended a now-defunct for-profit college will have $168 million in private loan debt discharged. The loan cancellation is part of a proposed deal between the Consumer Financial Protection Bureau, attorneys general of 43 states and the District of Columbia and Student CU Connect (or the CUSO), a company that held and managed private loans taken out by students at ITT Tech.

Read More