“Minnesota people take out student loans in good faith so they can get training that will help them pay for their lives. My office shows once again that when companies take advantage of this good faith or exploit borrowers mired in student debt, we will sue them, ”Attorney General Ellison said. “I encourage all Minnesotans who have been affected by these companies or others like them to contact my office so that we can hold them accountable.”
Settlement with ITT Loan Trust
First, Attorney General Ellison secured a deal to secure nearly $ 1.6 million in debt relief for former ITT Tech students in Minnesota in a settlement with 48 Attorneys General and the Federal Office. consumer financial protection. Nationally, the settlement will result in approximately $ 330 million in debt relief for 35,000 borrowers with outstanding principal balances.
The settlement is with PEAKS Trust, a private lending program run by the for-profit college and affiliated with Deutsche Bank entities. ITT operated campuses in Brooklyn Center and Eden Prairie before filing for bankruptcy in 2016 as part of investigations by state attorneys general and US Department of Education action to restrict access to ‘ITT to Federal Student Aid.
PEAKS was formed after the 2008 financial crisis, when private sources of loans available to for-profit colleges dried up. ITT has developed a plan with PEAKS to provide students with temporary credit to cover the gap between federal tuition fees and the total cost of education.
According to the termination assurance approved on October 7, the attorneys general found that:
- ITT and PEAKS knew or should have known that students would not be able to repay the temporary credit when it became due nine months later. Many students complained that they thought the temporary credit was like a federal loan and would not be due for six months after graduation.
- When the temporary credit expired, ITT lobbied and coerced students into taking loans from PEAKS, which for many students carried high interest rates, well above federal loan rates. Pressure tactics used by ITT included removing students from the class and threatening to expel them if they did not agree to the loan terms. Many ITT students were from low-income backgrounds and had the choice of enrolling in PEAKS loans or dropping out and losing any benefit from the credits they had earned, as the ITT credits would not transfer to most. schools.
- The default rate on PEAKS loans is expected to exceed 80%, Due to both the high cost of loans and the lack of success, ITT graduates got jobs that earned them enough to make repayment possible. Delayed loans continue to affect student credit scores and are generally not dischargeable in bankruptcy.
Under the settlement, PEAKS agreed that it would forgo collection of outstanding loans and cease operations. It will send notices to borrowers regarding the canceled debt and ensure that the automatic payments are canceled. The regulation also requires PEAKS to provide credit reporting agencies with information to update the credit information of affected borrowers.
Students will not have to do anything to benefit from debt relief. The notices that PEAKS sends to borrowers will explain their rights under the settlement. Students can direct questions to PEAKS at [email protected] or 866-747-0273, or the Consumer Financial Protection Bureau at (855) 411-2372.
Settlement with a California student debt relief company
The Ramsey County District Court also approved a settlement that requires a California student debt relief company that illegally collects fees from customers to cease operating unlicensed Minnesota and pay. the state to fully reimburse its Minnesota. consumers.
The company – EDU Doc Support, based in Fountain Valley, Calif. – is part of a recent wave of debt settlement companies pledging loan forgiveness to consumers mired in student loans. As the Attorney General’s Office warns, these companies often charge consumers hundreds or thousands of dollars in illegal upfront fees to enroll them in repayment plans or consolidation loans that all federal student loan borrowers do. eligible can apply on their own for free via the United States. Department of Education.
The Attorney General’s office has received numerous complaints over the past few years from companies tricking consumers into believing that the fees will be used to pay off consumers’ student loan debt when the companies are actually pocketing the fees. Companies also often try to avoid oversight and registration as licensed debt settlement service providers, as required by Minnesota law.
The rule, approved Oct. 8, requires EDU Doc Support to pay nearly $ 43,000 to the state for refunds to Minnesota consumers and forgo collection of the additional $ 22,000 owed by Minnesota consumers. The settlement also requires that the business cease trading in Minnesota unless and until it registers as a debt settlement service provider. Attorney General Ellison’s office alleges in the settlement that EDU Doc Support violated consumer protections under Minnesota’s Debt Services Settlement Act.
Attorney General Ellison encourages anyone who has been affected by the business practices of EDU Doc Support in Minnesota and wishes to claim payment of their reimbursement to contact the Minnesota Attorney General’s Office by calling (651) 296-3353 (area Metro) or (800) 657-3787 (Greater Minnesota), or by submitting a complaint form on the Attorney General’s website at www.ag.state.mn.us/Office/Complaint.asp.
The Attorney General’s Office encourages borrowers to visit its website for additional information on how to avoid student loan scams, including a publication titled Student loan aid companies that charge high fees for what you can do for free. Student loan borrowers can access the United States Department of Education website – www.studentaid.ed.gov/sa/repay-loans – for additional information on federal student loan repayment programs available. free of charge to all eligible borrowers.