Many people have seen an ad for ITT Tech at some point — they’re little features of graduates talking about the opportunities their degrees afforded them, and video of the happy graduates playing with their kids and smiling with their families accompany the anecdotes used to sell an ITT education.
Smiles may be scarce at ITT Educational Services today.
The Consumer Financial Protection Bureau is suing the company for predatory student lending, the bureau announced Wednesday. ITT offers technology-oriented degrees through ITT Technical Institutes and Daniel Webster College, reaching 70,000 students at more than 140 campuses across 38 states, according to its website.
The CFPB claims “ITT exploited its students and pushed them into high-cost private student loans that were very likely to end in default,” according to a news release from the bureau. This is the first enforcement action the CFPB has taken against a member of the for-profit college industry.
“We do not comment on pending litigation other than to say we believe that the bureau’s claims are without merit, and we intend to vigorously defend ourselves against the charges,” said Nicole Elam, a spokeswoman for ITT Educational Services.
An associate’s degree from ITT Tech cost upwards of $44,000, and the bill for a bachelor’s degree can exceed $88,000. For comparison: The average cost of four years of tuition at an in-state college would cost about $37,000, factoring in a 3% annual tuition increase and excluding room and board, according to College Board figures.
In addition to the cost of an ITT Tech degree, the CFPB is taking issue with credits that often don’t transfer to nonprofit schools and employment prospects that often don’t make up for the student debt of an ITT Tech graduate. ITT projected a 64% default rate for its students, according to the CFPB.
Unaffordable student loans have been a growing problem for American consumers. Education debt often cannot be refinanced or discharged in bankruptcy, sometimes stunting the finances of graduates whose adult lives have barely begun. Unpaid student debt can wreak havoc on your credit, too, with delinquency and late payments knocking big points off credit scores.
“ITT marketed itself as improving consumers’ lives but it was really just improving its bottom line,” said CFPB Director Richard Corday, according to the news release. “We believe ITT used high-pressure tactics to push many consumers into expensive loans destined to default. Today’s action should serve as a warning to the for-profit college industry that we will be vigilant about protecting students against predatory lending tactics.”
The bureau said it is seeking restitution for victims, a civil fine and an injunction against the Indianapolis-based company.
More on Student Loans:
- How Student Loans Can Impact Your Credit
- How to Pay Off Student Loans With Forgiveness Programs
- A Credit Guide for College Graduates
- How to Pay for College Without Building a Mountain of Debt
- Strategies for Paying Off Student Loan Debt