Consumers Harmed by ITT Tech Could be Eligible for Compensation

In 2016, the Chicago Tribune reported that the for-profit ITT Technical Institute was shutting down. All of the campuses in the Chicago area and all 130 campuses across the country closed in September of 2016, and students received emails informing them that the school was closing. In the months leading up to the school’s closure, it had been the target of numerous investigations and lawsuits concerning consumer protection, as well as the school’s failure to be in compliance with accrediting standards set by the Accrediting Council for Independent Colleges and Schools. In total, more than 40,000 students were impacted by the closure.
Why is this important now? A recent article in the Washington Post explains that “a federal judge approved a settlement Wednesday allowing former students at ITT Technical Institute to participate in the bankruptcy proceedings of its parents company, giving them a shot at the remaining assets of one of the nation’s largest for-profit college operators.”
Former Students with Student Loan Debt Could Get Relief
Last year, former ITT Tech students filed a lawsuit against ITT Educational Services, the parent company of ITT Technical Institute. What did those students want? They wanted to be considered as creditors in ITT Educational Services’ bankruptcy so that they could be eligible to recoup some of the money they lost. That lawsuit alleged that the students collectively who attended ITT Tech between 2006 and 2016 have a $1.5 billion dollar claim against the company that includes breach of contract allegations and violations of consumer protection law. The case was a class action lawsuit.
A federal judge, as we noted above, recently agreed that former ITT Tech students should be eligible to receive payment from the company. However, the court decision does not automatically mean that former students will receive compensation. Rather, the estate first will pay secured creditors of ITT Educational Services. Then, if money remains, unsecured creditors—which these students now function as—may be eligible to receive a portion of the remaining funds. If the “full class of students involved in the lawsuit” agrees to these terms, then they may receive a share of what remains.
Tuition Money Refunds for Former ITT Tech Students
The settlement does not just allow former ITT Tech students to be eligible for a share of the remaining estate. In addition, it clarifies that any money still owed to the school (which, for all of these students, totals almost $600 million) will be erased, and about $3 million in paid tuition will be refunded to students.
Yet that does not help the students who took out federal and private student loans to cover their educations at ITT Tech. Even if they do receive a portion of the estate, consumer protection advocates predict that the payout will only amount to “cents on the dollar.”
Contact an Oak Park Bankruptcy Attorney
Do you have questions about how this claim could affect you? An experienced Oak Park consumer protection attorney can assist you. Contact the Emerson Law Firm to learn more about the services we provide to students and consumers in Chicagoland.
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