The bankruptcy trustee charged with cleaning up after failed for-profit schools operator ITT Educational Services Inc. is suing the U.S. Department of Education and financial backers of a private loan program, accusing them of helping ITT victimize students, WSJ Pro Bankruptcy reported. Trustee Deborah J. Caruso says an assortment of financial institutions helped ITT through a loan program that allegedly preyed on low-income students who were considered credit risks. As for federal regulators, Caruso says that the Education Department knew ITT’s business was in trouble but looked out for its own financial interests, adding to the problem of students stuck with big student loan payments and flawed degrees. The bankruptcy trustee’s arguments surfaced Friday in lawsuits filed in a bankruptcy court in Indianapolis, where ITT collapsed almost two years ago. The lawsuits are part of the trustee’s effort to find cash to pay some $1.5 billion in claims from students, teachers and suppliers left in a lurch by ITT’s abrupt shutdown.
