Approximately 35,000 former students of ITT Technical Institute, a former for-profit education company, collectively will receive $330 million of personal student loan forgiveness. supported today’s judgment:
There will be no further collection of 43,000 outstanding private student loan debt from these ITT Tech students.
Credit agencies will not reference this student loan debt on borrowers’ credit reports.
Former students don’t got to take any action to receive student loan forgiveness. Their student loans are going to be cancelled automatically, and that they will receive more information about the settlement by mail.
Why will this student loan debt get cancelled? The settlement stems from a 2014 lawsuit regarding private student loans that ITT issued to its students through PEAKS Trust, a personal student loan program affiliated with Deutsche Bank. Former students claimed during a lawsuit that the private student loans carried excessively high interest rates, and in some cases, they were allegedly pressured by ITT, which has since filed for bankruptcy, to simply accept the loan terms. The default rate on these student loans —which are typically not dischargeable in bankruptcy—was projected to succeed in a whopping 80%. the buyer Financial Protection Bureau (CFPB) and 48 state attorneys general helped secure the scholar loan forgiveness for borrowers. The settlement applies only to non-public students, not federal student loans.
Income-Based Repayment Program
Another great interim option would be an Income-Based Repayment program. The benefit of an IBR is that it’s based strictly on what you earn. It allows for a more affordable monthly payment capped at 10-15% of your discretionary income.
Also, an IBR program offers the long-term benefit of student loan forgiveness after 20-25 years of payments. The period depends on when they took the loan. Currently, under IBR programs, amounts forgiven are also treated as taxable income. It should also be mentioned that President-elect Joe Biden’s student loan plan focuses heavily on Income-based Repayment programs. Hence, it is expected that such repayment plans will be more accessible in 2021.
If you were attending ITT when it shut down on Sept. 6, 2016, or you withdrew from an ITT Technical Institute on or after May 6, 2016, you have another option. You can transfer earned credits to another institution to continue your education in an equivalent program.
Borrowers who are current ITT students, recent graduates, and students who withdrew in the past 120 days can transfer their credits according to the offer by the U.S. Department of Education.
Transfer Your Credits
If you want to continue your program of study, the U.S. Department of Education is connecting you with community colleges that will transfer over ITT Tech credits.
However, if students opt for this option, they may not be eligible for a closed school discharge on their student loans. Instead, you might want to keep the credits from ITT and transfer them to a similar program in another school.
If you do transfer into a related program offered by another school, that school will evaluate your ITT coursework. It will decide whether to give you credit for already completed works. Also what courses you need to take to complete your program of study.
The Education Department is working with ITT officials and representatives from the state and postsecondary education oversight organizations, to process student records from the 136 schools. So that transfer schools could start evaluating students’ remaining qualifications for Federal Student Aid funds.
ITT will take responsibility for any return of federal student aid funds. The Department will work with ITT officials to make sure the loan funds are restored for future eligibility. If you transfer the credits toward a similar program and you completed or are going to finish that program, you will not be eligible to receive a closed school loan discharge.
We encourage you not to pay for companies for student loan forgiveness or consolidation programs that your federal loan servicer provides for free, on behalf of the Education Department. Your loan servicer, the companies that collect your payments, can also support you with these goals for free of charge. If you need help with your student loans, you should contact your servicer, because you never need to pay for these services.