CFPB Vs. ITT
Career College Central summary:
The Consumer Financial Protection Bureau this week filed a lawsuit against ITT Educational Services, accusing the higher education company of engaging in predatory lending and other abusive practices. The bureau’s lawsuit marks its first enforcement action against a career college and is an indication, some observers said, of how seriously and aggressively the watchdog agency plans to use its enforcement powers in this politically charged sector of higher education.
The complaint accuses ITT of pressuring students into loans and misleading consumers about their colleges’ job placement rates, accreditation and the transferability of credits. The CFPB alleges that the company developed a private loan program that coerced borrowers into high-interest loans that ITT knew were likely to fail and, by the company’s own projection, had default rates as high as 64 percent.
The CFPB said the abuses at ITT took place between mid-July and December 2011. The suit seeks an unspecified amount in civil penalties and restitution for victims as well as an injunction against the company. The bureau’s action had been foreshadowed by disclosures in recent months and years that the CFPB was investigating "for-profit" colleges’ institutional loan programs. Corinthian Colleges has also said it is the subject of an investigation by the bureau.
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