On September 6, 2016, a for-profit “college’, ITT Education Services, abruptly closed its 130 campus which operated under the business name “ITT Technical Institute.” The decision to close was after the U.S. Department of Education decided to deny ITT the ability to obtain further federal student loan funds.
ITT- like many other “for profit colleges”- has been the subject of intense federal and state investigations for almost a decade. The allegations against ITT included claims of fraudulent enrollment practices, altering of student grades to recruitment fraud.
The closure of ITT has left approximately 40,000 students with an uncertain future with respect to both completing their education and resolving existing student loans. Some students may be able to avail themselves of the so-called “closed school” discharge to wipe-out student loans. Other students may be able to transfer to another institution from ITT. The US Department of Education has released the following information to provide initial guidance to effected students:
The Law Office of Robert W. Murphy has been involved in challenging trade and “for- profit” school abuses since the early 1990’s. The first generation cases addressed trade school misrepresentations as to the quality of the educational experience and the benefits of a degree from the school. In some instances, students paid $30-50 thousand dollars for a 12 month computer technician “certificate” that could have been obtained for a fraction of the time and expense at a public institution. But because these “for profit” schools were primarily concerned with making a profit the schools would “cut corners” to save money by hiring recent graduates to be “professors” and by using in some cases computers that were 10-12 years old instead of the promised “state of the art” technology. The result was a large number of unemployable and ill-trained graduates unable to pay the crushing student loans.
The second generation of cases addressed the student loans that the students took out to pay for the “education.” In instances where a private lender advanced funds to pay for the school, lawsuits were filed against the lenders under the so-called FTC Anti-Holder Rule. The Rule basically provides that the lender “stands in the shoes” of the school and could be liable to the student to the amount of the loan.
The Law Office of Robert W. Murphy is now considering the next generation of cases to obtain relief for harmed students. The focus of these new cases will be the investors and management of the failed schools. These potential defendants were the persons who truly profited from the wrong-doing and should be held accountable to both the public and the defrauded students.
For more information about your rights against for-profit-school fraud, please call Attorney Murphy.