Duped students teach a costly moral-hazard lesson

ITT Educational Services

30/01/2017 20:17

(The author is a Reuters Breakingviews columnist.  The opinions 
expressed are her own.) 
    By Kate Duguid 
    Jan 30 (Reuters Breakingviews) - Obama's crackdown on 
for-profit colleges raised standards and shut down bad actors. A 
$7.3 bln lawsuit filed by ex-students of bankrupt ITT seeks 
federal debt forgiveness too. It underscores the high price of 
doling out loans without first ensuring schools can make the 
grade. 
         
    Full view will be published shortly. 
    On Twitter https://twitter.com/kateduguid 
     
 
    CONTEXT NEWS  
    - A group of five former ITT Educational Services students 
on Jan. 3 filed a $7.3 billion class-action lawsuit against the 
for-profit college chain, seeking to be recognized as creditors 
in the college's bankruptcy proceedings. A federal bankruptcy 
judge was due to hear the motion on Jan. 30. 
    - ITT Educational Services ran 137 campuses under the names 
ITT Technical Institute and Daniel Webster College. 
    - The Project on Predatory Student Lending at Harvard Law 
School is representing the students. 
    - ITT shuttered in September 2016, one month after 
allegations of mismanagement and fraudulent recruiting practices 
prompted the Department of Education to cut access to new 
federal student aid. 
    - For previous columns by the author, Reuters customers can 
click on  DUGUID/  
    - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe 
  
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Harvard Legal Services Center ITT bankruptcy site     http://bit.ly/2iBWIDI 
Adversary complaint filing     http://bit.ly/2jOVRgE 
ITT SEC filing, June 2016     https://www.sec.gov/Archives/edgar/data/922475/000119312516663358/d224345d10q.htm 
New York Fed household debt report, Nov. 2016     https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2016Q3.pdf 
Senate report on ITT, July 2012     http://www.help.senate.gov/imo/media/for_profit_report/PartII/ITT.pdf? 
BREAKINGVIEWS-U.S. college industry being pushed back to basics  
   urn:newsml:reuters.com:*:nL1N1BD0OF 
BREAKINGVIEWS-A teachable moment in for-profit education    
 urn:newsml:reuters.com:*:nL1N1EA1QT 
BREAKINGVIEWS- Students deserve debt relief but truth comes 
first     urn:newsml:reuters.com:*:nL2N17125A 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Tom Buerkle and Martin Langfield) 
 ((kate.duguid@thomsonreuters.com; Reuters Messaging: 
kate.duguid.thomsonreuters.com@reuters.net)) 
 
Keywords: ITT/ESI LAWSUIT/BREAKINGVIEWS