A credit union service organization must forgive loans worth $168 million under the terms of a settlement that spans 44 states reached with the federal consumer financial protection agency, the agency announced Friday.
The Consumer Financial Protection Bureau (CFPB) said it reached the settlement with Student CU Connect CUSO, LLC, of San Diego, which it described as a company set up to hold and manage private loans for students at ITT Technical Institute. The bureau said it filed a complaint and a proposed stipulated judgment in U.S. District Court for the Southern District of Indiana alleging that the firm provided substantial assistance to ITT Educational Services, Inc., (ITT) in engaging in unfair acts and practices.
“ITT operated ITT Technical Institute until it filed for bankruptcy and ceased operations in 2016,” CFPB stated in a release. The release said the bureau’s complaint alleges that Student CU Connect CUSO was “actively involved in the creation and the implementation of the CUSO loan program. The complaint alleges that ITT induced its students to take out the loans by a variety of means, “and that CUSO knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of the CUSO loans and could not afford them.”
The consumer agency said that Student CU Connect CUSO “must provide notice to all consumers with outstanding CUSO loans that their debt has been discharged and is no longer owed and that CUSO is seeking to have the relevant tradelines deleted.” CFPB said the total loan forgiveness is estimated to be $168 million.
Additionally, the firm must stop collecting on and discharge all outstanding loans, and ask all consumer reporting agencies to which the firm furnished information to delete tradelines relating to the loans.
The bureau noted that 44 states plus the District of Columbia also settled with the firm Friday on the same terms.