Attorney General Ellen Rosenblum today filed an application with the U.S. Department of Education asking for the cancellation of federal student loan debt for thousands of former students, including an unspecified number of Oregonians, who attended ITT Technical Institute. AG Rosenblum was joined in the application by a bipartisan group of 25 state AGs. The now defunct for-profit school defrauded thousands of students by encouraging them to enroll and take out loans based on misleading information about the value of an ITT degree and empty promises of high-paying jobs after graduation.
The application, filed under the DOE’s borrower defense rule, was filed on behalf of students who were enrolled at ITT Tech between 2007-2010 when these deceptive tactics were used. This rule is available if a school mislead students and violated state consumer laws. Borrower defense only applies to Direct Federal Loans, and not private student loans or other loans administered by federal or state agencies.
“Students who attended ITT Tech during this four-year period were lured to the for-profit school based on promises that their degree would be extremely valuable once they graduated. That was simply not the case. ITT Tech’s profit motive led it to take millions of dollars from thousands of students, who were left with nothing more than a big chunk of debt and a shoddy degree. I hope the Department of Education acts quickly to get full loan relief —including forgiveness of debt still owing, as well as refunds of payments already made— for all affected former students,” said Attorney General Rosenblum.
This is not the first time AG Rosenblum has sought relief for defrauded students of ITT Tech. In 2019, Oregon settled for $2.2 million in debt relief to 242 former Oregon ITT Tech students with Student CU Connect CUSO, which funded private student loans for ITT students. Last year, Oregon settled for $1.6 million dollars in debt forgiveness for 231 former Oregon ITT Tech students with PEAKS Trust, a private loan program run by ITT and affiliated with Deutsche Bank entities.
Misleading Students
Based on a 2012 congressional report, ITT enrolled roughly 282,000 students across the country between 2007-2010. During this enrollment period, ITT showed a document, “Value Proposition for Employed Graduates,” to prospective students to convince them to enroll and, in most cases, borrow thousands of dollars in federal student aid. Analysis of the Value Proposition chart revealed that ITT misrepresented the value of its education, claiming it would be substantial, and that students who enrolled would get high-paying jobs upon graduation with a constant rate of earning growth.
ITT’s Value Proposition chart showed that ITT estimated earnings for ITT graduates at $100,000 more than the average earnings of workers with the same credentials over a graduate’s estimated lifetime. Dr. Jordan Matsudaira, an Associate Professor of Economics and Education Policy at Columbia University, evaluated the accuracy of ITT’s claims. Matsudaira found that ITT massively overestimated the financial gains that student borrowers could reasonably expect from an ITT program. This widespread and pervasive misrepresentation violated state consumer protection laws.
Attorney General Rosenblum led the application to the U.S. Department of Education along with Colorado Attorney General Phil Weiser. The application was also signed by 24 states and the District of Columbia.