The defunct for-profit college or its holding company did not inform students about the true cost of repaying these loans not until they took out the loan. The interest rates for these loans ranged up to 16.25%.
ITT Tech allegedly used aggressive tactics and in some cases obtained access to student accounts to sign them up for these loans without their consent.
Approximately 80% of the PEAKS loans are in default due to the high cost of the loans and ITT Tech graduates experience difficulty securing well-paying jobs.
Details of the settlement agreement
Under the settlement agreement, PEAKS will stop collecting on all and discharge all outstanding PEAKS loans.
The company is also required to provide credit reporting agencies information to correct credit scores that were negatively impacted by its illegal lending scheme.
PEAK is also required to inform borrowers that their student debt has been forgiven.
In a statement, California Attorney General Xavier Becerra said, “Using a private lending scheme, ITT Tech saddled students with massive debt, exorbitant interest rates, and a worthless diploma. Today’s settlement removes the financial handcuffs gripping thousands of California students defrauded by ITT Tech. These students and former students can now wake up from this borrower’s nightmare.”