In Major Victory, ITT Students Secure Full Debt Cancellation | Press Release
Former Students Had Been Fighting For Loan Cancelation for Years;
Project On Predatory Student Lending Submitted Report To Department In February Outlining ITT’s Fraud Committed Against Students
BOSTON – In another major victory for defrauded former for-profit college students, today, the U.S. Department of Education announced that it would fully discharge all remaining federal student loans for borrowers who attended ITT Technical Institute (ITT) from January 1, 2005, through its closure in September 2016. All told, this means 208,000 borrowers will receive $3.9 billion in full loan discharges.
This decision comes after the students, represented by the Project on Predatory Student Lending in the ITT bankruptcy, called on the Department to fully cancel the loans of all ITT students. In February, the Project submitted a report to Education Secretary Miguel Cardona, “Dreams Destroyed: How ITT Technical Institute Defrauded a Generation of Students,” detailing the massive scale of fraud and abuse by the defunct for-profit college ITT Tech. The documents unequivocally showed that ITT was not a legitimate educational institution: it systematically and brazenly lied to students in order to profit from their federal financial aid.
“ITT was a sham institution, and we have the receipts,” said Project on Predatory Student Lending President and Director, Eileen Connor. “Every student who attended ITT was impacted by its fraud and now, because of their resolve and perseverance, they will receive the justice they deserve by having their loans canceled. We have been fighting for these students for years, and we want to thank President Biden, Vice President Harris, Secretary Cardona, the Department of Education for recognizing the harm done to these students and canceling their fraudulent debts.”
As the Project on Predatory Lending’s report detailed, the ITT playbook included aggressively recruiting and pressuring students into enrolling, maxing out their student loans, and then leaving them out to dry by investing nothing in their education and leaving students with a mountain of debt and trauma. The documents show that this was a feature of the business model, not a bug, directed from the very top. Memos and comments from former CEO Kevin Modany show an over-the-top disdain and disregard for student borrowers and an interest only in lining the pockets of ITT executives and shareholders.
“There are thousands of families that they have separated due to debt, have fallen ill, and have irreparable damage drowning in debt – they deserve a second chance in life," said Jorge Villalba, former ITT student. “ITT cheated us out of an education and killed our dream to one day get ahead. The time that we have wasted there can never be brought back. The pain and suffering that we have endured have no dollar value.”
Examples in the report include:
An in-depth analysis of ITT’s Breckinridge School of Nursing, which was a notorious example of some of ITT’s worst abuses coalesced into a single program of study that caused great harm to students.
In the employee orientation video, CEO Kevin Modany said:
[I]t is our obligation to maximize the number of people that accepted our offer of assistance that ultimately progress through the recruitment part of the student success cycle. We then continue our focus on maximizing student success by assisting the transition of prospective students from the recruitment process into the financial aid process.
A memo from a Philadelphia, Pennsylvania campus in 2013 contained a handwritten comment that the recruiter was “doing well—didn’t give [prospective student] a chance to say no.”
ITT credits were not transferable — no other reputable institution would accept ITT credits. ITT even acknowledged this, in fine print. Yet one sample review of 2010 mystery shopper reports included 85 mystery shoppers in 28 states and at 63 different campuses who reported that ITT recruiters told them that transfer credits would be accepted or denied at the discretion of the receiving college.
In several instances, when it is noted that students complained about lack of equipment and resources — from a lack of internet on campuses to non-existent training equipment — Modany repeatedly refused any suggestion that ITT would invest money in these necessary costs. Yet ITT did spend:
$46 million in kickbacks to Sallie Mae on subprime student loans
$78 million in a single year to Deutsche Bank and other lenders because ITT students defaulted at extremely high rates.
$200 million on lead generation.
To work around government oversight and tell regulators that its programs were leading students to jobs in their field of study, ITT pushed the envelope on what could be considered job placement. They went so far as declaring that an exotic dancer was working in their field of study.
In another instance, one campus director created an entirely fictional company called Always Animal Clinic to say a graduate was employed. The company’s phone number was a direct line to an ITT employee.
These are just a few examples from the many thousands reviewed. For more information visit ppsl.org/itt.
About the Project on Predatory Student Lending
Established in 2012, the Project on Predatory Student Lending represents over a million former students of predatory for-profit colleges. Its mission is to use litigation to eliminate predatory practices in higher education, and to relieve current and future borrowers from fraudulent student loan debt. PPSL has won landmark cases to protect borrower rights, recover money owed, and cancel more than $10 billion in fraudulent debt. Its ongoing cases hold predatory colleges accountable and force the U.S. Department of Education to act on behalf of students and stop protecting this insidious industry.
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