Nearly 650 former Wisconsin students of a shuttered for-profit college chain will have about $5.8 million in debt forgiven, the Wisconsin Department of Justice announced.
Wisconsin’s agreement — part of a 43-state, $168 million agreement for more than 22,000 former ITT Technical Institute students — comes about three years after the failed for-profit college filed for bankruptcy in 2016 after several investigations were opened and the U.S. Department of Education restricted ITT’s access to federal student aid.
The state agency responsible for regulating for-profit colleges said that at the time the company closed, about 300 Wisconsin students were enrolled in ITT programs — 41 attended its Madison campus, 250 went to a campus in Greenfield and 26 were taking online courses.
The state’s agreement, announced Monday, is with Student CU Connect, which offered high-interest loans to finance students’ tuition.
“Students working to earn a degree should never be subject to deceptive, misleading, or abusive practices from the school they’re attending,” Attorney General Josh Kaul said in the announcement.
ITT pressured and coerced students into accepting loans from Student CU Connect by pulling them out of class and threatening them with expulsion if they did not accept the loan terms, according to DOJ.
ITT’s credits did not transfer to most schools, and students did not want to lose the credits they had accumulated by dropping out, so many signed up for the loans — even though neither ITT nor Student CU Connect made students aware of the true repayment cost. Many students assumed the loans operated like ones from the federal government and wouldn’t be due until six months after they graduated, the announcement said.
The default rate on the loans was projected to exceed 90%, according to DOJ.