ILNews

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

Scott Olson
January 8, 2013
Back to TopCommentsE-mailPrintBookmark and Share

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.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Based on several recent Indy Star articles, I would agree that being a case worker would be really hard. You would see the worst of humanity on a daily basis; and when things go wrong guess who gets blamed??!! Not biological parent!! Best of luck to those who entered that line of work.

  2. I was looking through some of your blog posts on this internet site and I conceive this web site is rattling informative ! Keep on posting . dfkcfdkdgbekdffe

  3. Don't believe me, listen to Pacino: https://www.youtube.com/watch?v=z6bC9w9cH-M

  4. Law school is social control the goal to produce a social product. As such it began after the Revolution and has nearly ruined us to this day: "“Scarcely any political question arises in the United States which is not resolved, sooner or later, into a judicial question. Hence all parties are obliged to borrow, in their daily controversies, the ideas, and even the language, peculiar to judicial proceedings. As most public men [i.e., politicians] are, or have been, legal practitioners, they introduce the customs and technicalities of their profession into the management of public affairs. The jury extends this habitude to all classes. The language of the law thus becomes, in some measure, a vulgar tongue; the spirit of the law, which is produced in the schools and courts of justice, gradually penetrates beyond their walls into the bosom of society, where it descends to the lowest classes, so that at last the whole people contract the habits and the tastes of the judicial magistrate.” ? Alexis de Tocqueville, Democracy in America

  5. Attorney? Really? Or is it former attorney? Status with the Ind St Ct? Status with federal court, with SCOTUS? This is a legal newspaper, or should I look elsewhere?

ADVERTISEMENT