SOUTHFIELD, Mich. (WXYZ) — The state of Michigan will receive a $15.3 million debt relief payment for nearly 2,000 former ITT Technical Institute students, Attorney General Dana Nessel announced Wednesday.
The payment is in result of a multi-state settlement, which awards over $168 million to ITT Tech students across the country.
Lending company Student CU Connect CUSO, which gave ITT Tech students loans of approximately $189 million between 2009 and 2011, will close its doors. In result of the settlement, CUSO must also forego collection of outstanding loans and notify credit reporting agencies of the status of all borrowers. CUSO must also make sure that their loan servicer cancels all automatic payments.
ITT Tech filed for bankruptcy in 2016 amid restrictions on their access to federal student aid and investigations from the Michigan attorneys general.
ITT Tech offered to temporarily cover the balance that remained after students received financial aid, according to the state attorneys general. The school expected students to repay the temporary credit before the next academic year, but many students thought they wouldn't have to make payment until six months after graduation.
In order to cover the temporary credit, ITT Tech pressured students to get loans from CUSO by threatening expulsion and removing students from class. Students took out loans because of the difficulty of transferring credits from ITT Tech to other schools.
“Paying for college is challenging enough without contending with unscrupulous and abusive lending practices,” Nessel said in a press release. “This settlement holds CUSO accountable for preying on ITT Tech students eager to expand their education.”