ADA Accessibility (/ago-accessibility-policy) ¡Bienvenido!

(/en-espanol) 欢迎 (/welcome-chinese) 歡迎 (/welcome-tradi onal-chinese)

Washington State (/)

Office of the Attorney General
A orney General Bob Ferguson
(/)
Home (/) | News (/news) | News Releases (/pressrelease.aspx) | AG Ferguson secures $5.1M in relief for more than 500 Washington students
scammed by lender affiliated with shu ered for-profit college

AG FERGUSON SECURES $5.1M IN RELIEF FOR MORE

THAN 500 WASHINGTON STUDENTS SCAMMED BY
LENDER AFFILIATED WITH SHUTTERED FOR-PROFIT
COLLEGE
(h ps://www.atg.wa.gov

FOR IMMEDIATE RELEASE:

Jun 14 2019

Student CU Connect con nued to issue loans despite ITT expec ng more than 60 percent would default

OLYMPIA — A orney General Bob Ferguson today announced that as a result of an inves ga on, Student CU Connect LLC
(CUSO) will provide debt relief for 100 percent of its student loans for deceiving ITT Technical Ins tute students when it
issued the loans.

ITT Technical Ins tute (ITT Tech) was a for-profit college that abruptly
closed all of its 149 campuses in September 2016, including campuses in
Sea le, Evere and Spokane Valley. CUSO must provide a total of $5.1
million in student loan debt relief to 538 Washington borrowers who
a ended ITT Tech. The median amount of debt relief Washington
borrowers will receive is $6,096. Na onally, CUSO will discharge $168.2
million in loans.

CUSO issued loans to only ITT Tech students between 2009 and 2011.
CUSO con nued issuing loans even though ITT projected borrowers
would default at rates exceeding 60 percent. The company now projects
rates to exceed 90 percent.

“For honest lenders, a borrower's ability to pay back a loan ma ers," said
Ferguson. “ITT Tech and CUSO were only interested in increasing their
bo om line at their students’ expense. They issued private loans they knew students could not afford in order to access
their federal loan dollars. This was a scam, and students deserve this relief.”

In the assurance of discon nuance (h ps://agportal-

s3bucket.s3.amazonaws.com/uploadedfiles/Another/News/Press_Releases/2019_06_14AssuranceOfDiscon nuanceFILE_0.pdf)
with Washington and other filings with the U.S. Consumer Financial Protec on Bureau, 43 other states and the District of
Columbia, CUSO agreed to forgo collec ons on all current and defaulted private student loan balances.

As a result of the assurance of discon nuance, CUSO may no longer collect on any of its loans and must discharge and cancel
all outstanding balances. Addi onally, the company will no fy the three major credit bureaus that the loans are no longer
outstanding and request that they remove the credit line associated with the loans.

CUSO will no fy all affected student loan borrowers of the debt relief by mail within 30 days.
CUSO’s conduct

ITT Tech’s tui on was higher than most other for-profit schools at the me, with its associate degree programs cos ng
approximately $44,000. Many students who enrolled in the school could not cover the cost of tui on with federal student
aid alone. ITT Tech used CUSO from 2009 to 2011 as part of a two-step scheme to ensure students could borrow enough to
cover tui on, no ma er their ability to repay their debt.

First, ITT Tech offered many students a “temporary credit” to cover the gap between what the student received in federal
student loans and the remaining tui on balance. The temporary credit only covered the first nine-month term, at the end of
which the school required the student to pay it back in full.

Many students did not understand that they would need to repay the temporary credit due to rushed mee ngs with ITT
Tech financial aid staff.

Second, when students were not able to pay back the credit a er nine months, the school pressured them to take out a
private student loan with CUSO or another ITT Tech-specific loan program by calling the students at home, barring them
from class or withholding course materials, diplomas and transcripts.

The former CEO of ITT Tech personally encouraged financial aid staff to pull students out of class to complete financial aid
applica ons.

This scheme allowed ITT Tech to skirt federal regula ons governing for-profit schools and shi the risk of providing loans to
students at high risk of default, while con nuing to profit off these students’ tui on.

Students who refused the private student loans faced expulsion from the school. Because transferring ITT Tech credits to
other schools was virtually impossible, students who refused to take out the loans could lose their en re educa onal
investment.

Students trapped in CUSO loans grappled with high interest rates of 13.75 to 16.25 percent, making progress toward paying
off the loan difficult. A er ITT Tech shut down its campuses, CUSO es mated that borrowers behind on their payments by 30
days or more could default at a rate of up to 99.5 percent.

ITT Tech is one of several for-profit higher educa on ins tu ons that closed in recent years a er state and federal
inves ga ons revealed decep ve marking tac cs and the facilita on of predatory private student loans. In addi on, the
A orney General’s Office has submi ed a claim in ITT Tech’s pending bankruptcy regarding its illegal conduct surrounding
student loans.

Former ITT Tech students interested in learning more about the ITT Tech bankruptcy case and a related class-ac on lawsuit
for former students can visit the Harvard Law Center’s website (h p://www.legalservicescenter.org/get-legal-
help/predatory-lending-and-consumer-protec on-unit/project-on-predatory-student-lending/former-i -students/).

This lawsuit is similar to others brought by state a orneys general against for-profit schools that target vulnerable students
with predatory student loan prac ces. In January, A orney General Ferguson secured more than $7 million in relief
(h ps://www.atg.wa.gov/news/news-releases/ag-ferguson-obtains-more-7m-student-debt-relief-thousands-
washingtonians-profit) for students who fell vic m to Career Educa on Corpora on’s decep ve prac ces. Ferguson also has
successfully defended Obama-era rules (h ps://www.atg.wa.gov/news/news-releases/judge-rules-trump-administra on-
unlawfully-blocked-student-borrower-protec ons) designed to protect students from predatory and decep ve prac ces by
colleges, including for-profit ins tu ons.

Ferguson also has recovered more than $1.5 million cracking down on debt adjustment companies that charge fees to help
borrowers consolidate their federal student loans and enroll in income-driven repayment plans — tasks that borrowers’ loan
servicers can and should help them with for free. More informa on on the office’s student loan work is available here
(h p://www.atg.wa.gov/news/news-releases/Student%20loans).

To assist student loan borrowers in Washington, the A orney General's Office has compiled a Student Loan Survival Guide
(h ps://www.atg.wa.gov/studentloanresources).

Addi onally, borrowers who need help understanding or resolving problems with their student loans should contact
Washington’s Student Loan Advocate at loanadvocate@wsac.wa.gov (mailto:loanadvocate@wsac.wa.gov).
 -30-

The Office of the A orney General is the chief legal office for the state of Washington with a orneys and staff in 27 divisions
across the state providing legal services to roughly 200 state agencies, boards and commissions. Visit www.atg.wa.gov
(h p://www.atg.wa.gov) to learn more.

Contacts:

Brionna Aho, Communica ons Director, (360) 753-2727; brionna.aho@atg.wa.gov (mailto:brionna.aho@atg.wa.gov)

News Releases 2020

News Release Search

Search for News Releases

Advanced Search (/news/news-releases/news-release-search)

Topics:
AGO (/news/news-releases/AGO)
Campaign Finance (/news/news-releases/Campaign%20Finance)
Civil Rights (/news/news-releases/Civil%20Rights)
Consumer Protec on (/news/news-releases/Consumer%20Protec on)
Courts (/news/news-releases/Courts)
Crime (/news/news-releases/Crime)
En Español (/news/news-releases/En%20Espa%C3%B1ol)
Health (/news/news-releases/Health)
Labor and Worker's Rights (/news/news-releases/Labor%20and%20Worker%27s%20Rights)
Legislature (/news/news-releases/Legislature)
Scams (/news/news-releases/Scams)
Student loans (/news/news-releases/Student%20loans)
undefined (/news/news-releases/undefined)
U li es (/news/news-releases/U li es)

News
Media Contacts (/media-contacts)
News Releases (/pressrelease.aspx)
Ferguson File (/news/ferguson-file)
Social Media (/social-media)

Office Information
About Bob Ferguson (/about-bob-ferguson)
Mission, Vision & Values (/mission-vision-values)
Contact Us (/contact-us)
Legal Divisions (/divisions)
Office Loca ons (/office-loca ons)
Annual Reports (/annual-reports)
Budget (/budget)
History (/brief-history-office-a orney-general)
Washington's A orneys General - Past and Present (/washingtons-a orneys-general-past-and-present)
Roles of the Office (/roles-office)
Task Forces (/task-forces)
FAQs (/frequently-asked-ques ons-faqs)
Contracts (/contracts)
Privacy No ce (/privacy-no ce)
Rulemaking Ac vity (/rulemaking-ac vity)
Tribal Consent & Consulta on Policy (/tribal-consent-consulta on-policy)

Serve The People

Economic Jus ce & Consumer Protec on
Safeguarding Consumers (/safeguarding-consumers)
An trust/Unfair Trade Prac ces (/an trustunfair-trade-prac ces)
Medicaid Fraud Control (/medicaid-fraud)
Lemon Law (/lemon-law-0)
Tobacco Compliance (/tobacco)
Protec ng Youth (/protec ng-youth)
Protec ng Seniors (/protec ng-seniors)
Social Jus ce & Civil Rights
Civil Rights Division (/wing-luke-civil-rights-division)
Counsel for Environmental Protec on (/counsel-environmental-protec on-unit)
Hanford Li ga on (/hanford)
Campaign Finance Law Enforcement (/enforcement-campaign-finance-laws)
Criminal Jus ce & Public Safety
Crime & Safety (/crime-safety)
Criminal Li ga on Division (/criminal-jus ce)
Sexually Violent Predators (/sexually-violent-predators)
Homicide Inves ga on Tracking System (HITS) (/homicide-inves ga on-tracking-system-hits)
Financial Crimes Unit (/financial-crimes-unit)
Death Penalty Cases (/death-penalty-cases)
Firearms (/firearms)

Initiatives
Open Government (/opengovernment.aspx)
Wing Luke Civil Rights Division (/wing-luke-civil-rights-division)
Environmental Protec on (/counsel-environmental-protec on-unit)
Human Trafficking (/human-trafficking)
Sexual Assault Kit Ini a ve (/sexual-assault-kit-ini a ve)
Comba ng Dark Money/Campaign Finance Unit (/enforcement-campaign-finance-laws)
Opioid Epidemic (/opioid-epidemic)
Veterans Advocacy (/veteranmilitaryresources.aspx)
2020 Legisla ve Agenda (/2020-legisla ve-agenda)
Student Loans/Debt Adjustment and Collec on (/studentloanresources)
Immigra on Services Fraud (/immigra on-services)
Vulnerable Adult Abuse (/vulnerable-adult-abuse)
Federal Li ga on (/federal-li ga on)

Resources
Consumer Scam Alerts (/scam-alerts)
File a Complaint (/fileacomplaint.aspx)
Execu ve Ethics Board (h p://www.ethics.wa.gov/index.htm)
Sign up for Newsle er Emails (h p://atg.us10.list-manage1.com/subscribe?u=28a64d02479d9d79402df2b20&id=ae281aef5b)
Avoiding Uncons tu onal Taking (/avoiding-uncons tu onal-takings-private-property)
Publica ons (/publica ons)
Reports to the Legislature (/reports-legislature)
Student Loan Survival Guide (/studentloanresources)
Veteran and Military Resources (/veteranmilitaryresources.aspx)
Civil Rights Resource Guide (/wing-luke-civil-rights-division)
Immigra on Guidance (/immigra onguidance)
Open Government Resource Manual (/open-government-internet-manual)
Data Breach Report (h ps://agportal-s3bucket.s3.amazonaws.com/uploadedfiles/Another/News/Press_Releases/2018%20Data%20Breach%20Report_FINAL.pdf)

AG Opinions
Opinions by Year (/ago-opinions-year)
Opinions by Topic (/ago-opinion/glossary)
Opinion Requests (/pending-a orney-generals-opinions)

Employment
Experience Excellence (/experience-excellence)
Employee Tes monials (/employee-tes monials)
A orneys & Law Clerks (/a orneys-and-law-clerk-careers)
General Employment Opportuni es (/general-employment-opportuni es)
Exempt Posi ons (/exempt-posi ons)
WA Management Service (/wa-management-service-exempts)
Volunteer and Internship Opportuni es (/volunteer-and-internship-opportuni es)
Diversity (/diversity)
Office Loca ons (/office-loca ons)

Contact Us (/contact-us)

Privacy No ce (/privacy-no ce)

Accessibility Policy (/ago-accessibility-policy)

Rulemaking Ac vity (/rulemaking-ac vity)

Sitemap (/sitemap)

Access Washington (h p://access.wa.gov)

Contact Webmaster (h ps://fortress.wa.gov/atg/formhandler/ago/WebmasterContactForm.aspx)

(/employee-resources-page)1125 Washington St SE • PO Box 40100 • Olympia, WA 98504 • (360) 753-6200

OFFICE HOURS: 8:00 AM - 5:00 PM Monday - Friday Closed Weekends & State Holidays