Former ITT Students Seek to Get Paid Just Like Other Creditors

by San Antonio Attorney

Some of the former students of ITT Educational Services have formed a group and filed a claim with a bankruptcy court seeking to be treated as creditors to the institution.  The new approach is an effort to compel the courts and the school to allow the former students to recover the money they’ve lost, just like the other creditors.

The problem with ITT started several years ago, with government regulators long wary of their methods.  There had been many complaints that ITT had deliberately deceived students regarding the merit of their education system and the job possibilities of graduates.  This propaganda then caused countless of people to shell out billions of dollars to enroll in the courses the school offered, but hardly helped provide stable careers.  In reality, the majority of its students left with overwhelming amounts of student debt and slim chance of finding jobs in their selected fields.

Within a decade before the school filed for bankruptcy years prior to ITT filing for bankruptcy (which was caused by the federal government’s discontinuation on access to student loan), the students of ITT had incurred about $7 billion in student loan debt, an estimated $1 billion of which were private loans with high interest rates.  Even though ITT’s behavior was reprehensible, students hardly have a way to escape from the debt.  Efforts to drive the educational loans bankrupt have failed, which motivated a group of Harvard attorneys helping at the Project on Predatory Student Lending to attempt a different approach.

The lawyers from Harvard met with five former students of ITT and sued on their behalf, seeking to get involved in ITT’s case, which is under a judge in Indiana.  By seeking to become creditors, the five former students hope to be in the same level with other creditors when the company has to divide its assets.  The objective is to get some of the company’s assets to utilize as debt absolution for the students who were victimized.

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