Yesterday, the court overseeing ITT’s bankruptcy case approved a motion to stop collection on all ITT “Temporary Credits.” ITT used unfair and deceptive tactics to get students to sign up for Temporary Credits, including by describing Temporary Credits as grants and threatening to expel students if they did not agree to the debt. Even after ITT filed for bankruptcy, its servicers and debt collectors continued to harass students to collect these Temporary Credits.
Former ITT students have consistently objected to ITT’s ongoing collection efforts. In January, the Project on Predatory Student Lending filed an adversary complaint in the bankruptcy case on behalf of hundreds of thousands of former ITT students, arguing that the debts were incurred as a result of ITT’s unfair and deceptive practices and asking the court to block the estate from collecting these accounts. The students then objected to the trustee’s request to hire more contractors to try to collect these Temporary Credits. The class of former students is currently represented by the Project on Predatory Student Lending and Jenner & Block LLP.
Former ITT students are gratified that the trustee has now decided to stop pursuing these accounts. Stopping collection on Temporary Credits is an important first step, but any ongoing collection on ITT-generated debt continues to harm students unjustifiably. Former ITT students continue to face collections on billions of dollars of federal and private student debts that the company generated by its unfair and deceptive practices.