By Pete Schroeder and Jonathan Stempel
(Reuters) - The U.S. Consumer Financial Protection Bureau (CFPB) said on Monday it had reached a settlement with ITT Educational Services Inc over predatory lending practices, but does not plan to collect any of a $60 million judgment from the bankrupt for-profit college.
The proposed settlement stipulates that the bureau will not seek any funds through bankruptcy proceedings from ITT, citing the limited amount available to be distributed to former students. The settlement, filed in the U.S. District Court for the Southern (NYSE:SO) District of Indiana also bars ITT, which filed for bankruptcy in September 2016, from providing student loans in the future.
The CFPB had sued ITT in 2014, alleging it engaged in predatory lending practices, pushing student borrowers into high-cost private loans that they did not understand and could not afford. ITT closed roughly 130 campuses as it filed for bankruptcy, amid growing government scrutiny of for-profit colleges.
In June, the government announced ITT's affiliated lender, Student CU Connect CUSO, would stop collecting on $168 million in outstanding student loans.