ILNews

ITT agrees to pay Sallie Mae $46M to settle suit

Scott Olson
January 8, 2013
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Carmel-based ITT Educational Services Inc., one of the largest operators of for-profit colleges in the nation, has agreed to pay Sallie Mae Corp. $46 million to settle litigation related to a loan agreement between the two parties.

Wall Street reacted unfavorably to the settlement Monday, as ITT shares fell to as low as $15 each in mid-morning trading, shedding as much as 22 percent of their value. The stock traded for more than $66 a share less than 10 months ago.

Reuters reported the settlement Friday, following ITT’s announcement of the agreement in a Dec. 28 regulatory filing.

Sallie Mae, the largest U.S. student loan provider, filed suit against ITT in July 2011, alleging that it breached the terms by failing to pay some amounts on time under the agreement signed in July 2007, according to Reuters.

ITT makes agreements with some lenders, including Sallie Mae, to provide private education loans to its students.

The $46 million payment will be made by Jan. 29, ITT said in the filing. The agreement contains no admission of liability by either party.

ITT said it will record an after-tax charge of $13.2 million, or about 56 cents per share, during the quarter ended Dec. 31.

Analysts were expecting ITT to report a fourth-quarter profit of $1.88 per share, according to Thomson Reuters.

ITT has more than 140 campuses across the country. The average cost of an ITT associate's degree program is $45,000, but scholarships and grants reduce that cost on average to $27,000.

ITT's enrollment figures have been sinking over the past year, mostly because of tougher federal rules involving recruitment.

Most for-profit educators have been suffering similar fortunes. Enrollments have tumbled across the industry, also in part because of a natural receding of the wave of students who entered for-profit colleges during the recession that ran from 2007 to 2009.

But more significantly, government investigations of the industry have exposed questionable recruiting practices, sky-high student debt loads and low graduation rates. New rules placed on for-profit colleges by the Obama administration threatened to yank federal student loans for programs whose students failed to pay down their debt loads.

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  1. This law is troubling in two respects: First, why wasn't the law reviewed "with the intention of getting all the facts surrounding the legislation and its actual impact on the marketplace" BEFORE it was passed and signed? Seems a bit backwards to me (even acknowledging that this is the Indiana state legislature we're talking about. Second, what is it with the laws in this state that seem to create artificial monopolies in various industries? Besides this one, the other law that comes to mind is the legislation that governed the granting of licenses to firms that wanted to set up craft distilleries. The licensing was limited to only those entities that were already in the craft beer brewing business. Republicans in this state talk a big game when it comes to being "business friendly". They're friendly alright . . . to certain businesses.

  2. Gretchen, Asia, Roberto, Tonia, Shannon, Cheri, Nicholas, Sondra, Carey, Laura ... my heart breaks for you, reaching out in a forum in which you are ignored by a professional suffering through both compassion fatigue and the love of filthy lucre. Most if not all of you seek a warm blooded Hoosier attorney unafraid to take on the government and plead that government officials have acted unconstitutionally to try to save a family and/or rescue children in need and/or press individual rights against the Leviathan state. I know an attorney from Kansas who has taken such cases across the country, arguing before half of the federal courts of appeal and presenting cases to the US S.Ct. numerous times seeking cert. Unfortunately, due to his zeal for the constitutional rights of peasants and willingness to confront powerful government bureaucrats seemingly violating the same ... he was denied character and fitness certification to join the Indiana bar, even after he was cleared to sit for, and passed, both the bar exam and ethics exam. And was even admitted to the Indiana federal bar! NOW KNOW THIS .... you will face headwinds and difficulties in locating a zealously motivated Hoosier attorney to face off against powerful government agents who violate the constitution, for those who do so tend to end up as marginalized as Paul Odgen, who was driven from the profession. So beware, many are mere expensive lapdogs, the kind of breed who will gladly take a large retainer, but then fail to press against the status quo and powers that be when told to heel to. It is a common belief among some in Indiana that those attorneys who truly fight the power and rigorously confront corruption often end up, actually or metaphorically, in real life or at least as to their careers, as dead as the late, great Gary Welch. All of that said, I wish you the very best in finding a Hoosier attorney with a fighting spirit to press your rights as far as you can, for you do have rights against government actors, no matter what said actors may tell you otherwise. Attorneys outside the elitist camp are often better fighters that those owing the powers that be for their salaries, corner offices and end of year bonuses. So do not be afraid to retain a green horn or unconnected lawyer, many of them are fine men and woman who are yet untainted by the "unique" Hoosier system.

  3. I am not the John below. He is a journalist and talk show host who knows me through my years working in Kansas government. I did no ask John to post the note below ...

  4. "...not those committed in the heat of an argument." If I ever see a man physically abusing a woman or a child and I'm close enough to intercede I will not ask him why he is abusing her/him. I will give him a split second to cease his attack and put his hands in the air while I call the police. If he continues, I will still call the police but to report, "Man down with a gunshot wound,"instead.

  5. And so the therapeutic state is weaonized. How soon until those with ideologies opposing the elite are disarmed in the name of mental health? If it can start anywhere it can start in the hoosiers' slavishly politically correct capital city.

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