On June 14, 2019, the Consumer Financial Protection Bureau (CFPB) announced a settlement with a private student loan provider that issued and managed student loans at the now-defunct for-profit ITT Technical Institute. Forty-five states including Kansas, Florida, Nevada, North Carolina, Iowa, Missouri, Kentucky, Ohio, Oregon, and New York also settled with the loan provider under the same terms.
The CFPB alleged in its simultaneously filed complaint in the U.S. District Court for the Southern District of Indiana that the provider engaged in unfair, deceptive, or abusive acts and practices (UDAAP) under the Consumer Financial Protection Act (CFPA) by inducing students to take out loans when it knew or should have known that the student borrowers did not understand the loan terms or could not afford them. ITT allegedly projected that over 60% of borrowers of the private loans originated by the affiliated student loan provider would default.
Under the proposed stipulated judgment, the loan provider is ordered to cease collection on and discharge all outstanding student loans, resulting in loan forgiveness of about $168 million. Additionally, the loan provider must notify all reporting agencies to which the provider furnished information to delete tradelines related to the loans.