Attorney General Xavier Becerra announced a nearly $170 million settlement Tuesday with a company that provided loans to students at the now-defunct ITT Technical Institute, which closed its 130 campuses, many in the Southland, in 2016 after a series of federal sanctions.
According to the Los Angeles Superior Court judgment entered July 12, the settlement with Student CU Connect CUSO LLC will provide $168 million in relief to 22,000 borrowers, 4,000 of whom are in California. Many of the students were low-income and the targets of aggressive and allegedly misleading sales tactics by the company and ITT, according to the Attorney General’s Office.
“ITT Tech, aided by CUSO, ripped off thousands of students in this illegal and coordinated scam,” said Becerra. “In addition to grossly overcharging vulnerable students for a sham education, the companies guided students toward expensive and unwieldy loans that were nearly impossible to pay back. Students should be worrying about homework, not predators looking to exploit them for a quick buck.”
ITT’s final school closures came shortly after the U.S. Department of Education prohibited the school from enrolling new students who use federal financial aid. The department also tightened its already enhanced oversight of the company, including a prohibition on ITT awarding raises, bonuses or severance packages to the company’s executives.
Defense attorney Tami Smason did not immediately reply to a request for comment.
Besides requirements that CUSO provide $168 million to student borrowers, the settlement includes restitution and borrower relief, according to the Attorney General’s Office. CUSO will cease conducting business, including acquiring or issuing student loans, and cease all collection activities.
CUSO will also cancel all outstanding balances of consumer loan accounts and will direct credit reporting agencies to delete the balances from consumers’ credit reports, according to the Attorney General’s Office. It will also implement a consumer redress plan to notify consumers of the settlement.
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