As creditors of ITT Educational Services fight over the remaining assets of the defunct for-profit college operator, one group has secured a significant victory in the bankruptcy proceedings: former students, the Washington Post reported. A federal judge yesterday gave final approval to a settlement that will erase nearly $600 million that 750,000 students owed ITT Technical Institute. The agreement, which was first announced in January, will also refund $3 million that students paid the for-profit chain. Before shutting down in 2016, ITT issued students “temporary credits” to cover remaining tuition after federal and private student loans were taken into account. These credits were allegedly marketed as grants, but debt collectors pursued students for the money even after the company filed for bankruptcy. Attorneys for the students asserted a $1.5 billion claim against the company for consumer-protection violations and breach of contract, and asked for status to cover anyone who attended ITT Tech between 2006 and 2016. Yesterday’s agreement recognizes the claim. If there is money in the estate to pay unsecured claims at the end of the bankruptcy, students would receive a share. In the meantime, ITT’s estate has notified students who are eligible for the debt cancellation, according to the Project on Predatory Student Lending at Harvard Law School, a legal aid group that worked with the law firm Jenner & Block to represent the students. Read more.
Now available in the ABI Bookstore: Pick up your copy of the updated and revised Graduating with Debt: Student Loans under the Bankruptcy Code, Second Edition!
