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Student CU Connect CUSO, LLC, a company created by credit unions to hold and manage private loans for students at the collapsed ITT Technical Institute, will forgive an estimated $168 million of that loan debt as part of a settlement with the federal Consumer Financial Protection Bureau (CFPB) and attorneys general for 44 states and the District of Columbia.
The for-profit ITT Tech chain went bankrupt and shut down in 2016 after a series of federal sanctions. At the time it enrolled roughly 43,000 students at 130 campuses.
"ITT induced its students to take out the loans by a variety of means," CFPB said in a written statement, citing its complaint. "CUSO knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of the CUSO loans and could not afford them."
The lender must stop collecting on and discharge all outstanding loans, under the terms of the settlement. It also is required to tell all borrowers with outstanding CUSO loans that their debt has been discharged.
