On January 3, 2017, a group of students filed a proof of claim on behalf of themselves and asked to represent all students who attended ITT between at least 2006 and the time ITT closed. On November 28, 2018, the Bankruptcy judge gave final approval to the Settlement Agreement between Student Claimants and the ITT Trustee. The court will grant the final order approving the Settlement approximately ninety days from the date of the final approval, assuming no states or the U.S. Attorney General file an objection to the Settlement.
PEAKS Settlements Frequently Asked Questions
CUSO Settlements Frequently Asked Questions
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Student Class Settlement
A year after ITT students filed a complaint against ITT and a class Proof of Claim in the ITT bankruptcy case, they proposed a settlement between the Trustee and the Student Class. The proposed settlement agreement received final approval on November 28, 2018. The settlement agreement recognizes a $1.5-billion-dollar claim against ITT by students who attended the school between 2006 and 2016, for widespread, systematic fraud and breach of contract. The Students’ claims included ITT’s use of high-pressure sales tactics to get students to enroll and remain enrolled, and that ITT deceived and misled students about financial aid options and costs of attendance, job placement and salary rates, the quality of equipment and experience of instructors, the desirability of ITT graduates by employers, ITT’s accreditation status, the transferability of credits, and career placement assistance.
Some Key Terms of the Agreement:
- Student Claimants get an approved $1.5 billion claim in the bankruptcy. In exchange, former ITT students give up their claims against the estate of ITT, and keep their rights to seek further relief from the Department of Education and private lenders;
- Over $500 million in student debt held by ITT is canceled and that cancellation will not be taxable; and
- The Trustee returned the $3 million that students paid directly to ITT after it declared bankruptcy (this already happened).
Click here to view the settlement agreement and exhibits.
Click here to view the notice and opt out form.
Common Questions About the Student Class Settlement Agreement
1. Am I part of the Settlement Class?
You are part of the Settlement Class if you attended ITT any time from January 1, 2006 to September 16, 2016, or if you attended Daniel Webster College from January 1, 2009 to September 16, 2016.
2. I went to ITT before 2006.
If you only attended ITT before 2006, you are not part of the Settlement Class and you still maintain all of your legal rights.
3. Does this settlement mean my private and federal loans will be cancelled?
No. Right now, the trustee can only cancel debts owed directly to ITT. Therefore, the settlement does not cancel federal or private loans. The settlement canceled nearly $600 million in debts that were owed directly to ITT, sometimes called “Temporary Credits.” It also returned $3 million to students who made payments on those debts since ITT declared bankruptcy in September 2016. There will be accurate credit reporting showing that these accounts have been deleted or paid in full.
4. How do I know if I paid on debt directly owed to ITT, and if I will be getting money back?
ITT issued Temporary Credits to students to pay tuition not covered by federal and private student loans. Many Temporary Credits were later replaced by private loans, including Student CU Connect CUSO and PEAKS loans—these debts are no longer considered Temporary Credits and are not included in the nearly $600 million that is being cancelled. Collection of the Temporary Credits, on behalf of ITT, were serviced by UAS, FirstSource, Security Credit Systems, Inc., Premiere Credit NA, General Revenue Corporation and other agencies. If you made payments to any of these collection agencies since September 2016 on ITT-related debt, you are entitled to receive money back, minus any administrative fees.
5. When will I get my money back?
As of March 23, 2018, all refund checks were mailed.
6. How will this settlement affect my credit?
This settlement will only affect your credit if you had Temporary Credits. If you had Temporary Credits, as described above, your account will either be marked as paid in full or will be deleted. There will be no further credit reporting on these accounts.
7. How much money will students actually get from the $1.5 billion allowed proof of claim?
We don’t know. The settlement grants the student class a $1.5 billion unsecured claim. This makes students a creditor, meaning that the estate owes them money. In a bankruptcy, the trustee has to determine and maximize the amount of money available to distribute to the creditors of the bankrupt company. Along with other unsecured creditors, the student class must wait to see if and how much money there will be to distribute to the student class. If, at the end of the bankruptcy, there is money in the estate to pay unsecured creditors, the student class will receive a proportional share. Any distribution plan must be approved by the court.
8. Are there lawyers representing me?
The Court has approved lawyers (called “Class Counsel”), the Legal Services Center of Harvard Law School and Jenner & Block, to collectively represent all Settlement Class Members. You will not be asked to pay for the services of these attorneys. You may hire your own lawyer to advise you personally about your rights, options or obligations as a Settlement Class Member in this lawsuit.
9. What happens if I do nothing?
If you do nothing and you attended between 2006 and 2016, you are a part of the Settlement Class, and you release all claims you may have against the Debtors related to the allegations in the case. You do not release claims against third parties, including the Department of Education and private loan lenders.
10. When will the settlement become final?
The settlement became final on March 5, 2019.