Student Loans Involving For-Profit Colleges Made Through Credit Unions Escape Regulation

NEW YORK — Credit Unions have been at the margins of the student loan crisis, yet they make student loans. The Center for American Progress, the United States Student Organization, Veterans for Educational Success and five other groupsprotested the role of credit union service organizations (CUSO) in partnering with for-profit colleges, particularly ITT Tech, in a July 30 letter to the National Credit Union Administration (NCUA), the federal credit union regulator.

The letter noted that ITT Tech has spent more on marketing and executive compensation than on classroom instruction. Overall, 20% of students who left ITT Tech end up defaulting on their student loans. In May, the Securities and Exchange Commission (SEC) filed fraud charges against ITT Educational Services, its CEO Kevin Modany and its CEO Daniel Fitzpatrick.

“We are deeply disturbed about the role of credit unions and credit union service organizations (CUSO) that partnered with for-profit colleges to offer predatory student loans,” the letter stated. “In particular, ITT Educational Services, the controversial for-profit college chain allegedly developed a scheme to issue high-cost private student loans to its students through a CUSO.” CUSOs are corporate entities in which federally chartered credit unions own a minority stake.

The letter also alleged that Eli Lilly Federal Credit Union along with six state-chartered credit unions partnered with ITT to offer these loans to ITT students. The Rochdale Group, a credit union consulting firm, recruited credit unions to partner with ITT through the CUSO Student CU Connect.

“Credit Unions should help students chart a bright future, lot load them unmanageable student debt,” said Maggie Thompson, campaign manager for Higher Ed, Not Debt in a statement. “Banks and credit unions should steer clear of for-profit colleges that mislead students, veterans, and taxpayers.”

The coalition demanded that that the NCUA determine whether ITT’s credit union partners adhered to the NCUA’s requirements and if not, consider enforcement actions.

But the buck stopped there.

So what options do the students who are feeling angry, abandoned, helpless have at this moment?

There is help to uncover the options available. Options which include lowering your student loan payment and portions of your loans being forgiven. While ITT Tech may have left their students feeling stranded and helpless, there are choices those students can make to get to where they want to be in their educational and financial future. Call us at (844) 692-6684 to see if you qualify for loan forgiveness.

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