The Consumer Financial Protection Bureau (CFPB) continues to carefully monitor how schools across the country are handling student loans. Unfortunately, some of the truly abusive practices appear to be frequently committed by “for profit” technical and trade schools.

            One such school, Indiana-based ITT Educational Services, Inc., has been recently investigated due to the way it handles student loans for adults seeking post-secondary technical education. As the CFPB notes on its website, “Tens of thousands of students are enrolled online or at one of ITT's roughly 150 institutions in nearly 40 states.”  Frequently, a single student may pay close to $44,000 for an associate’s degree – or $88,000 for a bachelor's degree from ITT.

            As the CFPB points out, “that’s significantly higher than the cost of similar degrees at a community college or a public four-year institution.”

What You Need to Understand about ITT and Many Similar Schools

            The term “for profit” when applied to a school should always raise a red flag for anyone seeking a reputable, yet cost-effective education. One of the best aspects of nearly all community college and state university programs is that they have extensive government oversight in regards to how they offer and administer financial aid to students.

            Stated simply, “for profit” technical schools – whether they're offering courses teaching paralegal, computer repair, medical assistant or other skills – “benefit when students take out large amounts of loans, regardless of the students’ long-term success.”

            In regards to ITT, the CFPB is “seeking restitution for victims, a civil fine, and an injunction against the company.” This is the first time the CFPB has pursued such “public enforcement action against a company in the for-profit college industry.” As the fees being charged above indicate, there's good reason for the CFPB to refer to this type of student loan handling as “predatory lending.” Sadly, one can argue that “predatory capitalism” is rapidly spreading into a great many American industries.

            If you’re personally thinking about enrolling in one of these schools – or any others – you must first compare their fees and then research which schools have the best proven job placement track record upon graduation. You should also request the federal government information that indicates what your estimated monthly student loan payments will be and how many years it’s likely to take you to pay the full loan (plus interest) back.  Always keep in mind the unpredictable nature of life and never overextend yourself in regards to student loans.

Other Special Student Loan Concerns Regarding ITT

The CFPB further states that “ITT encourage the students to enroll at ITT by providing them funding for [a] tuition gap with a zero-interest loan called, “Temporary Credit.” Students must usually pay that money back by the end of their first year. The CFPB further contends that ITT knew when this making such loans “that many . . . would not be able to repay their Temporary Credit balances or fund their next year's tuition gap.” In other words, the CFPB believes that ITT “used high-pressure tactics to push many consumers into expensive loans destined to default.”

Important Conclusions

            You must do everything you can to avoid falling into a predatory student loan trap. If you have questions about a particular school's reputation for honesty and fair dealings, always contact the CFPB via its website and/or your local Better Business Bureau (in advance) for their feedback and information.

            Also, give serious thought to just going to school part-time, while trying to pay as much of your required tuition and expenses at a reputable school as you go along. No one needs the excessive stress that a huge student loan balance often brings. Furthermore, your odds of having any student loan forgiven under a bankruptcy filing are infinitesimally small – in fact, it’s nearly impossible to obtain such relief.


If you believe that you’re a victim of any abusive debt collection practices, contact the Law Offices of Georgia consumer protection attorney Shane Smith so you can learn more about your rights under federal and state consumer protection statutes. Call (770) 487-8999 today to schedule your free initial consultation.

Shane Smith
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Advocate for the Seriously Injured in Georgia

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