News Column

Attorney General King, feds, sue ITT nursing programs

February 26, 2014

By Mike Bush, Albuquerque Journal, N.M.

Feb. 26--Gary King and three other state attorneys general on Wednesday joined the federal government in filing lawsuits against ITT Educational Services that accuse the for-profit college chain of predatory lending practices in its nursing programs and numerous other violations of U.S. and state law.

King was in the nation's capital for a meeting of the National Association of Attorneys General when the suits were announced. In addition to a state suit filed in Bernalillo County, a federal suit was filed in Indianapolis -- ITT is headquartered in Carmel, Ind. -- by the Consumer Financial Protection Bureau, an agency of the U.S. government. Illinois, Iowa and Kentucky also filed suits against ITT.

King cited "numerous violations of New Mexico's Unfair Practices Act and Post-Secondary Educational Institutional Act" as the basis for the state's involvement in the sweeping legal action.

He joined CFPB director Richard Cordray in making the announcement and said New Mexico was working jointly with the federal government and the other states in moving against ITT.

The suits claim that ITT, a private company, pressured and corralled students into high-cost loans that it knew were likely to default. According to the suits, ITT's aim was simply to increase profits.

The suits seek restitution for students who were victimized, civil fines, and injunctive and declaratory relief to end ITT's practices.

Calls to ITT headquarters Wednesday were not returned. Its nursing programs are available in 22 states, including New Mexico. It has provided post-secondary educational programs here since 1989.

"A significant percentage of the New Mexico students that entered the ITT nursing program were unable to complete the program," King said. The students "cannot get a job in their chosen field because their ITT credits will not transfer; they must start over at another institution." Meanwhile, he added, they "continue to suffer under their heavy student loan debt."

"ITT marketed itself as improving consumers' lives," Corday said, "but it was really just improving its bottom line. We believe ITT used high-pressure tactics to push many consumers into expensive loans destined to default. Today's action should serve as a warning to the for-profit college industry that we will be vigilant about protecting students against predatory lending tactics."

King's complaints about ITT practices in New Mexico mirror many of the claims in the federal lawsuit. Specifically, King said:

-- ITT's Breckinridge School of Nursing in New Mexico has never been accredited, but false marketing led the public to believe it was.

-- The company "misled its nursing students to believe that the credits earned in the ITT program would transfer to other higher educational institutions."

-- ITT was less than truthful when it claimed its associate nursing degree could be used as a basis for a bachelor's degree in nursing or other advanced degrees at other educational institutions.

-- The company misrepresented "the true cost of the program, the flexibility of the program and student loans, and the amount and types of debt incurred by these students."

-- ITT misrepresented to students that its nursing program was flexible and compatible with maintaining full-time employment when, in fact, class schedules were fixed and the curriculum was rigid and unsuited to maintaining full time employment;"

-- ITT charged the nursing students for "tools" that were unusable, outdated or unnecessary.

King also charged that ITT took unfair advantage of the students' lack of knowledge, ability and experience by misleading them about their obligations and rights under the agreement they were required to sign for admission. Moreover, students were inadequately informed about the cost of the loans and the full amount that would have to be repaid.

ITT, King said, "failed to disclose to students that what was originally presented as a 'no interest' loan would be 'rolled over' into a private, high interest-bearing loan product."


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Source: Albuquerque Journal (NM)

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