ITT sued over student loans

For-profit college chain ITT sued over student loans - CBS News

 

Don't know if the lawsuits would go through because the students know what they are getting into. Especially, signing the agreement, student handbooks, financial responsibilities, and etc.

 

The CFPB alleges the students were not aware of what ITT was up to. ITT allegedly enrolled students and had them take out the max federal loans they could and then offered to finance the difference at 0% interest with payment due at the end of the academic year. CFPB alleges ITT was aware the students would never be able to make all the payments at the end of the nine months. When they defaulted on the 0% plan, ITT allegedly pressured students to take out high interest private loans. Those who refused the private loans were threatened with explusion. The hook here is that ITT allegedly 1) was really the private loan lender (they controlled the 3rd party lender and guaranteed the loans), and 2) planned to funnel students into the loan program all along (as they allegedly told their investors all along).

Read the complaint: http://files.consumerfinance.gov/f/201402_cfpb_complaint_ITT.pdf

 

That is so incredibly shady. It makes me sick. I wonder when this student loan bubble is going to visibly burst (I believe the bursting is currently going on behind the scenes as we speak).

I'd just like to make the point that (for those who are unaware) in 2005, some shady politicians changed the rules of the game because Sallie Mae paid them off. Very important consumer protections were removed from student loans, including truth in lending. I was a student during the time when public and private lenders practically chased me down to get me to take out loans because they were of no risk to the banks. It was my personal experience that full disclosure did not exist. For example, I was NOT told that I could not refinance my loans or that I could not file for bankruptcy (this was the case with my private lenders, although, my federal loan documents did not disclose that I could not refinance, either). I was a first-generation borrower, so I didn't know what I didn't know, and apparently, my lenders did not have to legally tell me a few key items that would have caused me to walk away and not finish school at all.

I really hope that those ITT students get justice. How sad.

 

You are correct, the loan is basically done with no collateral and there is no asset on the back end that can be affected by market fluctuation in price, hence creating a major price shift and causing a rift in the markets. You cant be 'upside down' on your degree in a way that changes the conditions of the loan. Plus, since all the money is backed by the public, and since we print our own money here in the USA, there is no requisite cash flow dependent upon people paying these things off.. all this means no bubble that can burst, just high multiples in tuition costs that are increasing hugely disproportionate to inflation for ever and ever... my understanding is that if you can ride the wave for 20 years you get let off the hook for paying it back anyway so it is the perfect system.

 

My apologies for the incorrectness of my technical terms. Bubble or no bubble, it is bad news, it is hurting people and it is unsustainable.

The "Ride the wave for 20 years" piece is an unfortunate bit of misinformation perpetuated by the powers that be in order to calm the public and make them think that all is well. Those 20 years still require payments (based on income, and many complain that the payments are still far too high to afford). Not everyone qualifies (despite what they'd like you to think) and if you make it to the end of the 20 years, interest has continued to accrue on top of more interest, increasing the size of the balance exponentially. The "forgiven" amount becomes taxable income. Have fun paying tax on $1 million when you can't even afford your minimum payments.

I'd also like to add that this does not apply to private loans, which are basically credit cards from hell.

 

Victim?

I may be a victim of these practices. Where can I find more information on getting involved with this? Is there class action we should know about? Thanks in advance!!

 

The CFPB (Consumer Financial Protection Bureau) has filed suit against ITT tech. You can google class action lawsuit against ITT technical institute and check out the Facebook posting by Niki Howland on the ITT tech lawsuit page. She posted some links that you can make formal complaints regarding ITT to the feds.

 

I've given up on thinking my Attorney-General simply has my best interests at heart.

 

and then there's this

http://www.nytimes.com/2017/01/06/business/student-victims-seek-to-become-creditors-in-itt-bankruptcy.html?rref=collection%2Fsectioncollection%2Feducation&action=click&contentCollection=education&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=sectionfront&_r=0

 

Very interesting development. If the court rules in the students'/"creditors'" favor, I wonder how much the result will open up a floodgate, possibly on the class-action level, for former students wanting to get paid in this manner.