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ITT Tech files for Bankruptcy

ITT Tech
ITT Education Services, Inc. (ITT) filed for Chapter 7 bankruptcy Friday, September 16, following the announcement in August that ITT would no longer be enrolling new students.

ITT filed bankruptcy to liquidate its business after the U.S. Department of Education cut off federal student loans to ITT students.  ITT listed liabilities of between $100 and $500 million. 

The case 16-07207 In Re ITT Education Services Inc, was filed in the Southern District of Indiana.  Another big for-profit college operator that ran into trouble was Corinthian Colleges, Inc.  Like ITT, Corinthian could not continue to operate after the Department of Education limited access to federal student aid for its students.  Both for-profit college operators faced accusations of false promises of good paying employment for graduates.

Students who were enrolled or withdrew in the prior 120 days have two options.  They can apply to have their federal student loans discharged under a government program.  They can transfer their credits to another institution.  Those who transfer their credits and complete “comparable” studies at another institution will not have their loans discharged.  Students will have to carefully consider the benefits and costs of transferring credits.

Students that previously attended ITT and can show they were wronged by actions of the school can apply to have their loans forgiven through another program known as “Defense to Repayment”. They will have to prove they were defrauded.

The Department of Educations estimates that if all students apply for the closed-school loan discharge, it could cost as much as $478 million.

 


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Posted September 17, 2016