The Consumer Financial Protection Bureau has reached a $60 million settlement with the defunct lending arm of a bankrupt for-profit lender, ending a five-year legal battle.
The settlement, with ITT Educational Services, Inc., resolves a lawsuit the CFPB filed back in 2014 that accused the lender of engaging in unfair and abusive practices related to private student loans that were originated to students of ITT Technical Institute. ITT allegedly “induced” students to take out loans even though it allegedly knew that many of the individuals who were taking out the loans did not fully understand the terms and conditions of the loans and were not able to afford them.
ITT and its trustee will pay $60 million and agree to never again originate private student loans under the terms of the settlement.
ITT filed for bankruptcy protection and stopped operating in 2016.
A copy of the proposed settlement, which must be approved by a District Court judge for the Southern District of Indiana, Indianapolis Division, can be accessed by clicking here. Neither the proposed settlement nor a press release from the CFPB indicated if the $60 million penalty was being placed in the agency’s civil money penalty fund or if it would be returned to individuals who took out loans through the institution.