Nearly 200 Former ITT Students Refusing To Pay Student Loans, But Is That A Good Idea?

The abrupt closure of ITT Educational Services’ 130 ITT Tech campuses left tens of thousand of current students sitting in limbo with regard to both their education and all the student loan debt they had amassed. Likewise, a number of recent ITT grads are holding degrees they believe are now worthless. A group of nearly 200 stranded ITT students and graduates are the latest to join the ongoing “debt strike” started after the collapse of Corinthian Colleges.

The former students — whose number currently stands at 176 — announced Wednesday that they had formed the “ITT Tech Collective Strike” and would no longer be making payments on their federal student loans as a way to protest what they believe is the government’s failure to address the alleged abusive practices of the for-profit education industry.

The group, like the Corinthian debt strikers, is calling on the federal government to wipe away the loans of ITT borrowers who were allegedly pressured by the school to enroll and take out hefty federal student loans.

Borrowers claim that the Department of Education should have protected them from ITT, the company’s alleged abusive practices, and its eventual failure that has rendered their degrees worthless.

“We trusted that education would lead to a better life,” the borrowers say. “And we trusted you to ensure that the education system in this country would do so. Instead, each month you force us to make payments into an immoral system that profits from our aspirations. This is a profound betrayal.”

To that end, the former students say they will stop their monthly payments so they can “begin to collect on [the Department’s] obligation to erase them.”

“These are debts we cannot pay and should never have been forced to,” the group says. “Erase them now. Return what we have already paid. Our debt strike will continue until justice is served.”

It makes sense that students would be unhappy about having student loan obligations in spite of ITT’s closure and its alleged bad practices, but they should also be aware that refusing to make monthly payments could have an adverse affect on their credit score and future finances.

“ITT students have every right to be frustrated and angry by what has happened,” Suzanne Martindale, staff attorney for Consumers Union, tells Consumerist. “ITT allegedly pushed students into debt for programs that didn’t do what they promised – and with all the negative scrutiny of ITT’s business dealings, ITT credits or even degrees are likely to be more of a liability than an asset.”

Still, defaulting on an education loan — which can occur when a borrower fails to pay for 270 consecutive days — can wreck one’s finances, leading the government to seize wages without a court order.

“Students need to proceed with caution here,” Martindale adds. “It’s important to note that there are ways to cancel loans if the school closes or if the school misled students.”

The Department of Education is currently updating its application processes for the closed school discharge process with new regulations.

Martindale notes that ITT students should stay tuned for more developments, and see if any legal aid offices in their area could provide advice or tips.

What students should definitely not do is pay money to any of the shady companies that tend to swoop in during these situations, offering help with things like loan consolidation, forgiveness, or transferring credits.

Check out this Consumerist story for more info on what ITT students need to know about the programs and options available to them.

[via Bloomberg]