The government will grant $600 M for the former ITT Tech students as debt relief as a result of the ITT Tech Class Action Lawsuit. This news quickly escalated because of the huge amount of forgiveness granted. The Director of the Project on Predatory Student Lending mentioned that this single settlement is more valuable to borrowers than the total benefit Betsy DeVos provided to debtors.
According to the Federal Reserve, the total amount of student loans has reached $1.7 trillion. Based on current statistics, there are more than 44 million borrowers of student loans in the United States. Even worse, around 35% of these borrowers find it difficult to make repayment of their debts.
If you are one of those who has been facing a challenge to repay their student loan debts, then you might seek some way out. Take an in-depth look at this post because we have some good news that might be interesting for you. As a former student of ITT Tech College, you can get a great chance to take the benefit of the case known as the ITT Tech Class Action Lawsuit.
Before getting into the details
As you probably know, there is a wide range of student loan forgiveness and discharge programs in which you can eliminate your outstanding debt with the help of them. The most popular and forefront one of such programs is student loan relief for the students of ITT Tech College, which has been a subject that has generated a lot of heated discussions by now.
Although this program is an excellent opportunity for a specific group of students to wipe out their massive amount of debts, there is something you have to be aware of before applying. Currently, there are a lot of student loan forgiveness scams, and there is no doubt that you can face them while asking for ITT Tech forgiveness. That is why we recommend you only use the official sources that we will provide in the further paragraphs.
ITT Tech Class Action Lawsuit
ITT Tech college is one of the largest education companies all around the US. The college has been operating in 38 states with over a hundred campuses. In September 2016, the US Department of Education restricted ITT Tech from accepting new students. After that, the college announced bankruptcy and declared that it would shut down all of its campuses.
As a result of the ITT Tech Class Action Lawsuit, in 2016, a Federal Bankruptcy Court Judge finally approved a settlement against the college. According to this settlement, there is $600 M debt relief for the students who have borrowed student loans to attend ITT college. Through this settlement, more than 750 000 ITT Tech students can wipe out their student loan debts. Besides, the borrowers can get an additional $3 M as a refund.
However, borrowers should be informed about the consequences of this settlement. The settlement does not grant forgiveness immediately. As a result of bankruptcy, the assets are liquidated, and the remaining funds are used to pay for creditors. There are some creditors that are entitled to funds before students. Once they get paid, and there is still some money left, the students can get paid. The reason for such a hierarchy is that student debt is not a secured claim.
How to Qualify for ITT Tech Student Loan Forgiveness?
First of all, it is worth noting that in 2018, the US Department of Education declared that they were allocating $150 M for the student loan discharge. This discharge is called Borrowers Defense to Repayment program, and it also includes ITT Tech.
Borrowers Defense to Repayment program takes some hard work and a little bit of time to get approved. Besides, an alternative forgiveness program is Student loan Discharge for Closed School. Unfortunately, you are not able to use both of them at the same time; you can only take advantage of just one of these options.
Each of these programs has its requirements and conditions to be eligible. Although it may take time and effort to file an application form, when you take into account the result, which could save you ten thousand dollars, it is worth it to apply right now. However, first, it is better to take a closer look at each of these programs separately to know more about the required conditions.
What are the Illegal Activities that ITT Tech was Accused of?
We can classify the general claims and complaints against the college in the following way. Pay attention to whether you have personally experienced any of them, and if you have, then use it to support your claim on your ITT Tech BDAR application.
- Telling lies about ITT Tech Accreditation
- Releasing false reports about job placement rates
- Inaccurate information about credits to be transferred
According to the ITT Tech Class Action Lawsuit, the company alleged for using unlawful acts to attract more students and increase its revenues.
What Happened with ITT Tech?
The conflicts over ITT Tech were not new when the school closed in 2016. Till that time, the school had already engaged in questionable practices through its loan programs, called PEAKS and CUSO.
These loan programs assisted students who lacked the money to finance education during the financial crisis. Although the purpose was fair, these loan lines quickly became expensive for the students, and they struggle to repay the debt. In 2015, the SEC claimed that ITT Tech provided loans even to those students that did not qualify for the program.
Now, imagine a school with a lot of debt to be collected, and students are unable to repay it. Sure, such an event could bother the investors who could foresee the losses. Hence, allegedly, the school hid this information from the investors.
Meanwhile, the school faces a risk of losing accreditation. Accreditation is necessary to show education quality. Besides, if they lose accreditation, they could not get government funds in the future. In such a situation, the Education Department was worried that the school’s financial situation was not stable, and as a result, it required a credit letter worth $247 million.
What was the Result?
The school already dealt with many challenges, and it previously paid $124 million as a credit letter. The school officials mentioned that another credit letter would not let the school operate. Hence, they also blamed the Education Department for the closure of the school.
ITT Tech Student Loan Forgiveness via Borrower’s Defense Program
Borrower’s Defense to Repayment program is considered one of the most popular student loan forgiveness programs, which could provide a considerable contribution to you for eliminating your massive loan debts. To qualify for this program, all you are going to need is proving that you have experienced a defrauded activity by the school you have attended. In our case, you need to show that you have been deceived or misled by the ITT Tech college, which caused you to take a student loan to attend the college.
If we take into consideration the previous claims against ITT Tech, such as deceptive business practices, releasing false statements, and misleading reports about students, you have a high chance of getting BDAR. These claims are directly from the ITT Tech Class Action Lawsuit. Therefore, you have a significant advantage to use them against the college to support your ITT Tech BDAR application.
Remember, application for Borrowing Defense to Repayment program is a strictly regulated legal process. That is why if you think that you do not meet the requirements of eligibility criteria, don’t waste your time just trying it out. However, if you think you cover the conditions to qualify, then there is no need to lose time on the way of sending your application. It is because, as we mentioned earlier, getting approval from the Department of Education may take a long time.
More on Borrower’s Defense Rule
Borrowers Defense to Repayment program aims to help students that for-profit schools misled. During the Obama Administration, this rule was developed so that students are treated fairly. The general reasoning behind this program is that if the student was misled, there is no need for her/him to pay money for such education.
Borrower’s Defense to Repayment program involves direct loans. If you have direct federal loans, you can apply to this program. Unfortunately, other federal loan types and private loans would not qualify for this ITT Tech Student Loan Forgiveness option. Borrowers with FFEL or Perkins loans cannot apply to this program.
The application process to this program is relatively fast. It takes around 30 minutes to fill the application. However, before you apply, make sure you collect all necessary documents. The program does not have many eligibility conditions. The most important qualification is proving the fraudulent activities of the school. Hence, you need to have strong arguments and collect any document that can support your claims. For example, email communications with the enrollment officers, brochures with false advertising, contracts with incorrect information, or any similar document can help. Try to explain why you think the school misled you.
Once you submit the application, the Department of Education will review your application. They will consider the documents and your claims. As mentioned, the ITT Tech Lawsuit involves many claims against the school, including the qualifying reasons for Borrower’s Defense program. Hence, you have a high chance to prove that the school engaged in unethical and unfair practices. The Education Department will notify you about the decision. In the notice, you will see the discharge percentage if your application is successful. In case of rejection, you can find out the reasons in the notice.
Updates to Borrower’s Defense Program
Although this forgiveness program benefited a lot of people during the Obama Administration, the program lost its attractiveness during the Trump Administration. Education Secretary Betsy DeVos did not favor this program and thought about it as a “free money” opportunity for debtors. Hence, during recent years, the applications took a lot of time to review. Even when they were reviewed, many borrowers received rejections. There have been cases when borrowers received approval, but their discharge percentage was 0%. Such irrational decisions happened due to a changed discharge calculation method.
Luckily, Biden mentioned in his “Plan for Education beyond high School” that he wants to return Borrower’s Defense rule to its glorious days, as during the Obama Administration. When he appointed Miguel Cardona as Education Secretary, this plan was evident. He recently announced that the Education Department would change the discharge calculation method. Many borrowers who received partial discharge could be entitled to full discharge. Therefore, it is the best time to apply for this ITT Tech Student Loan Forgiveness opportunity.
ITT Tech Student Loan Forgiveness via Closed School Student Loan Discharge
Another way to get rid of your outstanding student loan debts is by applying for Closed School Student Loan Discharge. Through this program, the borrower has a great chance to eliminate your debts fully or partially. Even if you get lucky, you can receive specific reimbursement on the amount that you have already paid to the college.
Closed School Student Loan Discharge provides the full amount of forgiveness for the different types of credits such as Direct Loans, Perkins Loans, and Family Education loans. To be eligible, you are required to be attending the ITT Tech college before the school shut down. Otherwise, if you have withdrawn from the school within four months after the college closed, then you might qualify for the ITT Tech loan forgiveness through the Closed School Discharge program.
You can download the application form through the link of the official website of Federal Student Aid. After you complete the application, you need to send it to your lender and wait for a response. It may take time to get approval, but when your request gets received, you will have a very long shot by wiping out thousands of dollars on your debt balance.
Other Forgiveness and Discharge Programs
Due to the ITT Tech lawsuit, the two programs- Borrower’s Defense and Closed School Discharge become more effective. Borrower’s Defense is based on the claims against the school mentioned in the lawsuit. Meanwhile, Closed School Discharge is due to the fact that ITT Tech campuses closed.
However, these two options are not the only ways to eliminate the debt. If you graduated long ago, you could still benefit from other programs. For example, if you work in public service, you can apply for Public Service Loan Forgiveness. This program will eliminate your whole debt once you make 120 payments. Another option can be Teacher Loan Forgiveness which grants either $5,000 or $17,500 for a five-year service. Perkins Loan discharge, on the other hand, can bring 100% debt elimination for your Perkins loans.
Discharge options due to total and permanent disability, bankruptcy, death, etc.
What about Private Loan Borrowers?
Unfortunately, neither of these programs is accessible to private student loan borrowers. Besides, private lenders do not provide any forgiveness opportunity to borrowers. Only a few lenders allow death and total and permanent disability discharge. Otherwise, there is no way to eliminate the debt.
As a private student loan borrower, your only effective option can be Student Loan Refinancing. This option involves getting a new loan to repay the existing loan. You can think of it as ineffective because you still owe the debt. However, the new loan should have better terms so that refinancing makes sense. For example, the new loan can have a lower interest rate. In this case, you will save money in the long run.
The ITT Tech lawsuit brought benefits to students, although their lost time and effort cannot be compensated. Besides, it creates favorable conditions for students to apply for Closed School Discharge or Borrower’s Defense to Repayment programs. Moreover, other student aid programs exist for federal borrowers. When it comes to private student loan borrowers, they do not have many options except student loan refinancing. Through this program, they can save money.
However, before you make any decision, it is advisable to consult your choices with a debt specialist. Debt experts like those we gathered under Student Loans Resolved roof, can analyze your finances and develop a sound debt management plan. Call us now for a free consultation.