HUNTINGTON - West Virginia Attorney General Patrick Morrisey joined a coalition of 44 attorneys general in reaching a $168 million settlement with a loan company linked to ITT Tech, a now-bankrupt, for-profit college.
The settlement, which involves Student CU Connect CUSO LLC, erases $508,026 in student loan debt for 61 former students of ITT Tech in West Virginia. Nationally, more than $168 million in debt will be relieved for 18,664 students.
Student CU Connect CUSO offered loans to finance students' tuition at ITT Tech.
The West Virginia Attorney General's Office played an integral role assisting approximately a dozen nursing students who had their licensing jeopardized by ITT Tech's abrupt closure in Huntington, the only ITT campus in the state.
The Attorney General's Office assisted the nursing students in receiving both their diploma and the opportunity to take their state nursing test by connecting them with the federal bankruptcy court.
"This settlement demonstrates our office's commitment to protect consumers and stop unfair loan practices," Morrisey said in a release. "Those students who put forth time and effort toward a degree - and ultimately a career - only to have it interrupted in this manner deserve the relief they will receive."
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.
The attorneys general alleged that ITT, with CUSO's knowledge, offered students temporary credit upon enrollment to cover the gap in tuition between federal student aid and the full cost of the education.
The temporary credit was due to be repaid before the student's next academic year, although the attorneys general contend ITT and CUSO knew or should have known that most students would not be able to repay the temporary credit when it became due.
Many students complained they believed the temporary credit was similar to a federal loan and would not be due until six months after graduation.
The attorneys general allege ITT coerced students to accept CUSO loans once the temporary credit was due. Pressure tactics included pulling students out of class and threatening expulsion if they did not accept the loan terms.
The settlement was contingent upon federal court approval and a related settlement between CUSO and the federal Consumer Financial Protection Bureau. Both were received Friday.
The CUSO loan program originated approximately $189 million in student loans to ITT Tech students between 2009 and 2011.