CUMBERLAND – West Virginia Attorney General Patrick Morrisey joined a coalition of 48 attorneys general to reach a $ 330 million multi-state agreement with a student loan company accused of lobbying students to accept loans they couldn’t repay.
The deal clears $ 1.1 million in debt for 138 West Virginia consumers. They were all former students of ITT Technical Institute, a bankrupt, for-profit college.
The agreement involves PEAKS Trust 2009-1, which was created in 2009 to purchase, own and manage certain loans offered to students enrolled in the ITT technical institute.
“Students looking to expand their education and career opportunities shouldn’t be preyed upon by loan companies,” Morrisey said. “This type of illegal conduct must be stopped so that consumers are not deceived.”
ITT has developed a plan with PEAKS to provide zero-interest gap financing, short-term loans payable in one payment due nine months later. PEAKS and ITT offered students temporary credit even though they should have known that students would not be able to repay the loan when it became due. Eighty percent of the loans are in default.
Many students complained that they thought the loan would not expire until six months after graduation.
The deal claims that ITT used lobbying tactics and forced students to take out loans from PEAKS after their temporary credit ran out. In some cases, students were withdrawn from class and threatened with expulsion if they did not accept the terms of the loan. As a result, many students ended up enrolling in PEAKS loans.
The agreement requires PEAKS to cease all collection activities and stop accepting payments from victimized consumers. PEAKS also cannot sell, transfer or assign any loans.
West Virginia joined the agreement with Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts , Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.
Read a copy of the agreement at https://bit.ly/3iySVU1.