ITT Students’ $1.5 Billion Settlement Heard by Judge In Bankruptcy Settlement Today | Press Release

January 24, 2018

More than $500 Million In Student Debts Would Be Cancelled Due To ITT’s Fraudulent Actions;

Landmark Settlement Builds Case For Department Of Education To Cancel Loans of Former ITT Students

INDIANAPOLIS, IN – Former students of the for-profit college ITT would receive a $1.5 billion claim in a proposed settlement heard today in federal bankruptcy court, including having more than $500 million in debts cancelled and $3 million returned to students who had paid the company directly since it filed for bankruptcy, the Project on Predatory Student Lending and Jenner & Block announced.

The settlement proposal, which today received preliminary approval from the Bankruptcy Court in Indianapolis, would recognize a $1.5 billion claim against ITT by students who attended the school between 2006 and 2016, for widespread, systematic unfair and deceptive practices and breach of contract. Now, all participants in the case and members of the class have until April to submit their views of the settlement with the court before it is heard for final approval on June 13.

ITT deceived and misled students about financial aid and costs of attendance, job placement and salaries, the quality of equipment and experience of instructors, the desirability of ITT graduates by employers, ITT’s programmatic accreditation, the transferability of its credits, and career placement assistance. The students’ allegations also included ITT’s use of high-pressure sales tactics to get students to enroll and remain enrolled. In January 2017, former ITT students filed a class complaint and proof of claim in the bankruptcy, laying the groundwork for the settlement proposal heard today. The student class is represented by the Project on Predatory Student Lending and Jenner & Block.

“ITT perpetrated a massive fraud on students, lying to them about everything from tuition costs to their own accreditation status, and left thousands of students in massive debt that they never should have had,” said Project on Predatory Student Lending Director of Litigation Eileen Connor. “This landmark settlement provides important and necessary relief to those students. ITT’s estate has now cancelled the debts of its students because of ITT’s fraudulent actions, and it’s time for the Department of Education and all private holders of ITT debt to do the same.”

“When collection stopped on temporary credit loans, that was a huge relief,” said former ITT student and class member Paul Goodwin. “However, I have still been struggling to pay back my student loans, which I should not even owe because of the way that ITT systematically lied to students. Getting more relief on temporary credit loans is great news for me and my family, but I am still waiting for the Department of Education to discharge my federal student loans.”

Key terms of the agreement include:

  • All of the nearly $600 million in “temporary credits” — accounts the company claimed students owed directly to ITT — will be cancelled. This settlement does not cancel any other private or federal student loans.
  • All of the almost $3 million students paid directly to ITT since ITT declared bankruptcy in September 2016 will be returned to students, and there will be accurate credit reporting showing that these accounts have been deleted or paid in full.
  • The Student Class’s claim will be allowed in the amount of $1.5 billion. If there is money in the estate to pay unsecured claims, the student class will receive a proportional share based on the size of the allowed claim.
  • ITT students keep their rights to seek further relief from the Department of Education and private lenders.

Over the last decade of its existence, ITT took in over $7 billion in student aid, the majority of which came in the form of federal student loans. ITT’s investment in education was dwarfed by its expenditures on advertising and executive compensation. Data from 2014 show that on average, ITT graduates earn the same or less than high school graduates with no college education. Approximately one in five ITT students defaulted on their federal student loans within three years.

Students, state and federal enforcement agencies, ITT, and the Department of Education itself have long known that this debt was fraudulently incurred. In March, the Department acknowledged that over $3 billion in debt was eligible for discharge based on ITT’s closure. In this settlement, ITT’s estate addresses some of the harm to students.

Former ITT students have submitted over 7000 borrower defense to repayment applications to the Department of Education. Despite the clear case that students have a defense to the repayment of their loans because of ITT’s fraud, only a handful of those applications have been granted, and no new applications have been granted since January 20, 2017.

The Department has repeatedly delayed, and is now attempting to rewrite, a rule that would have clarified the process for defrauded student borrowers to seek cancellation of their student loan debt. In particular, the rule would have provided an expedited procedure for former students of schools like ITT that shut down and leave their students with worthless degrees or no degree at all.  Moreover, the 2016 rule prohibits forced arbitration, which ITT used aggressively to keep evidence of its wrongdoing out of the public eye.


Established in 2012, the Project on Predatory Student Lending is the first legal services practice focused solely on representing former students of for-profit colleges. It litigates on behalf of low-income students and against the legal and financial conditions that allow the predatory for-profit college industry to cheat students and taxpayers. The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the U.S. Department of Education for its failures to meet its legal obligations to police this industry and stop the perpetration and collection of fraudulent student loan debt. It has also brought its clients’ experiences to bear on federal and state policymaking.

Jenner & Block ( is a law firm with global reach, with more than 500 lawyers and offices in Chicago, London, Los Angeles, New York and Washington, DC.  The firm is known for its prominent and successful litigation practice and experience handling sophisticated and high-profile corporate transactions.  Firm clients include Fortune 100 companies, large privately held corporations, financial services institutions, emerging companies and venture capital and private equity investors.  The American Lawyer has recognized the firm as the #1 pro bono firm in the United States for eight years; the firm has been ranked among the top 10 in this category every year since 1990.