ITT's Federal Loan Scam - Help me to Prove It!

[littlejoegould]

Hi,

First off - great site. I am in complete agreement that ITT and it's cronies (Devry, Strayer, etc) are all money-making schemes that bilk the gov't and students out of millions of $$ every year.

I'm a financial analyst who has been following ITT's stock for a while now; I'm trying to expose ITT's shadiness to our clients, who are mostly institutional investors (able to make large trades/positions). We'd like to recommend to our clients that they short the hell out of the stock (thereby taking profits when/if ITT's fraudulent finances are exposed, and helping to accelerate a crash in ITT's stock.)

This past Thursday (4/24), ITT (Ticker: ESI) reported quarterly earnings that far outstripped all Wall Street estimates. When asked where the surplus came from - especially considering the looming crisis in student loan markets, with lenders and banks exiting on the market on a weekly basis - ITT's management could not come up with a solid answer...they just patted themselves on the back! The stock is currently trading at ~$72, up from ~$51 just one week ago.

In October of 2007, Congress passed the College Cost Reduction Act ("CCRA"), which limited the amount of Federal $$ available to schools. My theory is that ITT pushed students to apply for all of their financial aid in advance of the CCRA's passage, and may even have asked students to take out loans for multiple academic years at once. If this is true, ITT is sitting on a heap of federal loan money, and is only reporting it on the books quarter-by-quarter, when in fact, they received and/or contracted for most of it prior to October of 2007.

Can anyone who is a current or former student back this up? Was the financial aid application process earlier this year? Did ITT pressure you to apply for more loans than usual? Did they pressure you to sign over more of your loan proceeds to them, rather than receiving the balance for your personal expenses? Did ITT now or ever encourage you to take out loans for multiple academic years at once?

There's a long history of law-suits against ITT, but none of them seem to stick. As someone who went to law school and now works in finance, here's my two cents: class-action suits are much more effective when the company's stock starts crashing (i.e. they don't have enough surplus cash and/or time to litigate effectively)...it's my hope that I'm right; that IITT is "cooking their books". If so, I could use your help to speed up the proverbial sh*t hitting the fan.

I'd like to hear from ITT students who can help confirm or deny my theory, or can provide any other information about suspect Financial Aid practices.

Thanks, in advance, for your responses. Please feel free to e-mail me at prashantrao7@hotmail.com

Best,

Prashant Rao

[sevenalive]

Well they had me already do my loans for next year in October, at the time i thought it was weird what she said. Ill get this years and next years money now to use on my classes right then and there.

That is exactly what they did, i did receive a letter from financial aid back in sept/oct to go to financial aid immediately and they were packaging me, from what i understood that should have occurred next year.

ITT keeps all loan funds we don't receive a check, its in that bullshit enrollment agreement that you have to sign.

[SheepToTheFleecing]

You asked,

Did they pressure you to sign over more of your loan proceeds to them, rather than receiving the balance for your personal expenses?

The question is based upon a fallacious premise. All students due is fill out forms and sign on dotted lines. We don't ever get any money. We get books and an education. (As crappy and overpriced as some of the books are, they are better than the education. I think so anyway, I don't know enough about the subjects to judge the books. My degree is a joke. A cruel expensive joke that I lie about at interviews.)

As far as cooking the books... I don't know. I know that the grades are inflated by the instructors. I get the definite impression that the job placement rates are inflated. (The actual rates on paper, not just the lies we are told.)

The laws being broken are by the teachers and the admissions reps. If an admission rep told a prospective student that he would sit in class and memorize verbatim answers for next week's test and the rest of the class would be hours of listening to the teacher bitch about aspects of his life, I don't think said student would choose to attend, nor would he believe the rep's claims that marketable skills would be attained and a promising career was ahead.

[Sethalidos]

it was similar for me. i just recently graduated with a bachelor's degree in December of last year and i was told i would have about 60 to 70k in loans it turns out i really owe 100k.

[sevenalive]

The interest rates for the loans are outrages, i have 16.8%, i was told 6.8.

Also, i heard that sallie mae ended their contract with ITT.

[littlejoegould]

Thanks for all of your responses.

Can anyone provide me with the following:

1) Any evidence that ITT guaranteed you a single digit interest rate (e.g. 6.8%), and then foisted a much higher interest rate upon you, where you were clearly misled to believe that all of your loans would be at the lower rate? That is, did they make representations about Federal Loans that were not true (i.e. had terms in a document/agreement that they didn't hold to)?

2) The letter/mailing that was sent to students in early Fall '07, asking students to come into financial aid so that they could package/repackage your loans for the the 2008-2009 academic year?

3) If you did repackage in early Fall '07, copies of any and all agreements/documents/mailings that had to do with your packaging/repackaging?

Although ITT might have been toeing the line ethically, I have not found clear and convincing evidence to prove that anything that they did with financial aid was illegal.

Thanks, in advance, for your responses. If you do not feel comfortable posting a reply to the forum, please send me a private message.

Prashant Rao

[sevenalive]

One of my friends did have to get packaged in oct 07. He is reluctant to talk to you (he is paranoid/has no balls). If he will not talk to you, i will get his documents, scan them and email them to you. Hopefully we can do something!

[ttobba]

Yes I have proof it was 6.8 if I find the paper. I was sometime like level 2 credit. Second best u can get. It said on the sheet it was a fixed rate. Now my rate is 19.2. God I hope I can find the paper. It is from December 2006 I know for sure because that is when I set up my financial aid.

[jth526]

Like many others, I am in debt $40,000 and feel completely taken advantaged of by ITT TECH. I am posting this to let students know that every company I've contacted regarding federal loan consolidation states that they are no longer providing this service (due to them not making enough money off of us). Considering the amount of debt ITT causes, this news is devastating and is going to leave numerous students struggling to pay off their outrageous monthly bills (due to outrageous interest rates). Sorry to anyone else attempting to consolidate their federal loans at this time.

( however, I believe companies will still allow you to consolidate your private loans )

..also.. i contacted ITT's financial department to inform them about my situation, of course they had nothing to say, offered no advice nor any options. However, they did not fail to mention that if you do not consolidate within your grace period, your federal interest rates will increase by .6%, which I believe is unfair if companies aren't offering this service (including Sallie Mae, who my loans are with).

[tcast2400]

I already owe 37,000 its been a 1 1/2 years. My interest as of now is already $3,000+... I was told after it was all said and done I would owe like 28,000... My Payments would be $150 a month... Mathematically that wouldn't even take care of the interest...

Its just Scary

[kayot]

52,000$ here, though I started out at 68,000$. I attempted to go to a real college and wasn't able to pay my loans on a part time kroger job. So I did the unthinkable, I defered my loans. It was stupid. I managed to get Saliemae to divide my loans into three groups. 11%+ interest in one, 10%- in another and a third tiny group for a single loan that was 16%. I payed the third group and now I only owe and additional 14.37 a day on my loans. I'm slamming the high interest rate loans like crazy. I think I'll have my loans paid off in 2 years and 6 months from now. I live at home like all those TV commercial claim but only because I'm broke.

I make about 1,800$ a month after taxes working at a Warehouse building pallets (Literally, this is a job I could've had right out of high school) at a rate of 14.20 and hour working 40+ hours a week in 4 shifts of back breaking work. After fuel (which is rather high) and other expenses such as clothing due to the fact that my job wears my clothing out at a rediculus rate. I have 1,600$ to apply to loans. After 400$+ in interest thats 1,200$ a month. Then take into account that so far, my car has died on me once. My coolant wasn't filled right and broke a pump (Second repair). My glasses got broken on the job and insurance wouldn't pay for a new frame. I got sick as hell before my insurance kicked in. All in all, life is as expected. ITT is a scam, and before ITT I never though the laws would allow something like this to happen. This event has opened my eyes.

A piece of advice to everyone here: Never use credit, always pay with cash. If there is one nugget of wisdom I have worth passing on, this would be it. To pay with credit is to pay with blood. And you never know when your dealing with the devil.

[BlkMamba]

I live in Nevada and would be happy to contribute to this cause. I was a student of ITT here in Nevada and also the ONLINE campus. I am in debt up to 60K so far. During my time as an ITT student, I was "allegedly" given a PELL grant and a SMART grant. ITT told me that the money from those grants were applied to my personal loans but I never saw the money as I sat in my one bedroom appartment eating ramen noodles and hoping to pay my rent. When I asked both campuses for copies of my financial aid documents, they declined my request. I was ultimately given a one-two page ledger print out that uses ITT's "code" for where the money was applied. I again requested my whole file, but was declined again. I want to know right down to the penny where all that money was applied. Last spring ITT Online sent me an email saying that I all of a sudden owed them about $3,000 and had to apply for a new loan. I had just received money that January for about $17,000. WTF? I knew that ITT does NOT allow students to attend ANY class if they are not paid up in advance or have prior arrangements. Then they said that the loan had to be turned in within 5 days, that they shipped my paperwork to me via DHL. DHL never got the papers to me. I called and called and utimately I didn't get the loan papers submitted by the so called "deadline". Three weeks or so later, I became ill and I dropped out for personal reasons and ITT attempted to then charge me for the semester to follow that I was not even enrolled in because I had just dropped out and therefore attempted to collect ANOTHER $3,000 or so dollars. A week or so later, I received a collection notice for the entire $6,000 appx dollars. I was fed up. I sent them a letter via the USPS requesting my FA documents and stated that if they did not comply with my request that I would notify the DOE and possibly take legal action. I was sent the infamous "ledger" print outs.

I then contacted the DOE, which I am still in touch with. They have been checking my FA. I just emailed my contact with the DOE a copy of the PDF file for the US (Levesky) VS ITT suit. The DOE contact was unaware of this filing and stated it would be looked over.

I still have yet to get the paperwork I requested or any kind of itemized explanation, not in ITT code, for where my money has been utilized. It's my information and I should get every scrap of paper I request. Since I am not getting it, it makes ITT seem quite guilty and behavior highly suspicious. I am fully in support of joining in on a class action. Please contact me and I am happy to help.

[Fierce513]

I didn't know anything about my loans. I just knew that whenever I was sent to the office to talk to my FA they were unavailable to talk to or someone new had taken their position so I really didn't know who my FA was. When I first enrolled my parents were denied loans and refused to take the private loans and however ITT thought it would be to my benefit to get me two private loans. Unfortunately I was never really made aware of what my loans were, how much was each one, the interest rates and what the consequences of borrowing from Sallie Mae was until I withdrew. I also don't like how they give loans to anyone. I was under 21 at the time making minimum wage (still making mw) & no credit what so ever. And yet I can apply for almost $50k in student loans?! I felt like I was kind of forced to overlook the fine print and sign my soul away.

[KingFriday]

I was kicked out for reasons I will discuss in a later blog. When i left I got taged with a $6100 temp loan that needs to be paid effective immidatly. The bastards at salle mae or better known as General Revinue Corp. Started calling me demanding payment even before I left. Funny thing is that at first they said that it was $6350, then they said that it was $6105. The point that im trying to get at here is that im going to go to my school and get my complete finacial report from my school. If you are still trying persue this and if my report helps I will be happy to show it you. I walked away from this school with grass stains on my knees, my ass hurting, wondering what was in that soda they gave me while I was waiting in the lobby. I got screwed, and I would love to get back at them.

[surmar2010]

Looking over my paperwork I noticed a few things.
First of all I noticed they estimated me for 180 credit hours is totally incorrect. I already took a bachelors program for Technical Project Management which I have taken all the general education classes leaving me with only 60 credit hours required. I remember asking about it at the time and the conditioned response was we’ll adjust it later. I think they also tried to damage my credit by taking out a private loan from chase for around $5K which I was told would not show up on my credit report if denied and it did. I’m not sure if this helps but they definitely lied about my credit hours reported.