google65222aaba5ef6dda
 
The government's Consumer Financial Protection Bureau has filed a potentially  precedent-setting suit against ITT Educational Services, Inc., one of the nation's largest for-profit education companies.  

As reported in the Chronicle of Higher Education, 
"The nation’s top consumer watchdog sued ITT Educational Services Inc. on Wednesday, accusing the for-profit college chain of pushing its students into high-cost private loans that it knew were likely to end up in default.The lawsuit, the first filed by the Consumer Financial Protection Bureau against a for-profit college, alleges that ITT offered its students zero-interest loans to cover the cost of their first year, knowing that they were unlikely to repay at the end of the year. When borrowers failed to do so, the company pressured them into taking out private loans to pay off their balance and finance their second year of education.The CFPB is seeking restitution for the victims, a civil fine, and an injunction against the company."

ITT and another large for-profit education company, Corinthian Colleges, Inc., have been subjects of investigations by the federal agency for more than a year.  The CFPB began  investigating for-profit education companies shortly after the consumer protection agency was created in July 2011.

ITT, which heavily advertises and operates programs across the nation, has been closing campuses during the time when it has been the subject of the federal investigation. In 2013, ITT reportedly suspended enrollment at two campuses and merged five others into existing campuses.

The new lawsuit has been hailed by attorneys who represent students harmed by predatory practices at colleges and trade schools.  Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, told the Chronicle that the lawsuit was  "a signal to the for-profit school industry that business as usual will no longer be tolerated." 

A copy of the lawsuit can be found here.
 


Comments


Your comment will be posted after it is approved.


Leave a Reply