Arkansas Attorney General Leslie Rutledge announced Tuesday (Sept. 15) an agreement to obtain $2,728,651.67 in debt relief for 473 outstanding loans taken by Arkansans who are former ITT Tech students. The settlement is the result of an investigation by 48 state attorneys general and the federal Consumer Financial Protection Bureau into PEAKS Trust, a private loan program that was operated by now defunct ITT Tech. Nationally, the settlement will result in debt relief of about $330 million for 35,000 borrowers who have outstanding principal balances.
“The settlement provides relief for Arkansans who fell victim to the illegal and high pressure tactics by ITT Tech and Peaks Trust,” said Rutledge. “PEAKS is now held accountable for its involvement in ITT’s scheme to coerce students to take out loans with PEAKS or be expelled. ITT Tech is no longer in business, and PEAKS will not be either. Businesses that cheat Arkansans will not be allowed to operate in this state.”
ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to restrict ITT’s access to federal student aid.
PEAKS was formed after the 2008 financial crisis when private sources of lending available to for-profit colleges dried up. ITT developed a plan with PEAKS and a similar entity, Student CU Connect CUSO, LLC, to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education.
Under the settlement, PEAKS has agreed that it will forgo collection of the outstanding loans and cease doing business. PEAKS will send notices to borrowers about the cancelled debt and ensure that automatic payments are cancelled. The settlement also requires PEAKS to supply credit reporting agencies with information to update credit information for affected borrowers.