ITT Loan Servicer Agrees to Forgive $330 Million
PEAKS Trust, which owned and managed loans for now-defunct ITT Educational Services, has agreed to forgive $330 million in student debt to about 35,000 borrowers in with the federal Consumer Financial Protection Bureau and 47 states and the District of Columbia.
The Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware and Deutsche Bank Trust Company Americas, which served as trustees to PEAKS, were also named in the settlement agreement announced Tuesday.
According to the CFPB, ITT had developed two private loan programs, the Student CU Connect CUSO and PEAKS loan programs, despite knowing nearly all borrowers were likely to default. To temporarily improve its balance sheet, PEAKS assisted ITT in using aggressive tactics to sign up borrowers, in some cases without their knowledge, CFPB said.
“PEAKS allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them,” the agency said. “ITT students were left saddled with high cost loans, derogatory information on their credit reports, or both.”
The CFPB in June 2019 also reached a settlement with CUSO in which it agreed to provide $500 million in relief to borrowers and stop trying to collect the loans.
The agency in August 2019 also a lawsuit it brought against ITT, in which the company agreed to pay a $60 million judgment and not provide student loans in the future.