The Consumer Financial Protection Bureau has filed its first lawsuit against a for-profit educational company, accusing ITT Educational Services of making predatory loans to its students.
ITT is one of the largest and most expensive for-profit post-secondary education chains in the country. It has schools in 40 states, including more than 135 ITT Technical Institutes and Daniel Webster College. Courses range from electronics and drafting to criminal justice and nursing.
In its lawsuit, filed Wednesday, the CFPB claims that ITT used high-pressure tactics to push many students into high-cost private loans it knew they couldn't repay.
"Although ITT marketed itself as improving consumers' lives, it was really just improving its bottom line," said CFPB Director Richard Cordray. "The result was that while many students got poorer, the investors and shareholders got richer."
When asked about the lawsuit, Nicole Elam, ITT's vice president of government relations, told NBC News, "We do not comment on pending litigation other than to say that the bureau's claims are without merit and we intend to vigorously defend ourselves against the charges."
According to the CFPB, ITT has among the highest tuition expenses of any for-profit school in the country. Earning an associate's degree can cost more than $44,000, and a bachelor's degree $88,000.
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Federal student loans won't cover the entire bill, so most ITT students need private loans. The school offered to help new students bridge that tuition gap with a zero-interest loan—called "temporary credit"—that typically had to be repaid at the end of the first academic year.