$ 2.6 million in private student loans to be forgiven following settlement: key details
A settlement agreement with a private student loan buyer following the collapse of a for-profit college chain will result in a $ 2.6 million student loan forgiveness for former students.
Pennsylvania Attorney General Josh Shapiro announced the deal yesterday. The settlement agreement is with Elevation Capital Partners, LLC, a student loan purchasing entity that has acquired private student loans granted to students attending Brightwood Career Institute sites in Pennsylvania. Brightwood’s parent company, Education Corporation of America, abruptly closed its campuses in December 2018, following a denial of accreditation. Elevation Capital Partners then bought back the outstanding private student loans associated with the company.
“When Education Corporation of America closed its doors, it left thousands of Pennsylvanians without a degree and a huge financial burden. Today we came to an agreement and canceled millions of dollars in debt for the Pennsylvanians, ”Attorney General Shapiro said in a statement.
According to a press release issued by Shapiro’s office, the deal alleges that students who attended Brightwood campuses were victims of misrepresentation by the Education Corporation of America regarding the quality of education, the accreditation status, career services and the overall financial standing of its schools. Shapiro had argued that the collection of associated private student loan debt held by Elevation Capital Partners would have violated Pennsylvania debt collection laws.
Shapiro said student loan borrowers affected by this settlement will be contacted directly by the Pennsylvania attorney general’s office. Borrowers do not need to take affirmative action to receive repayment or have their debts canceled.
Shapiro’s actions are just the latest moves by federal and state regulators to crack down on predatory colleges that often leave students with worthless degrees and unaffordable student loan debt. Last month, the Secretary of the United States Department of Education, Miguel Cardona, announced a policy change regarding the federal loan-to-repayment defense program that will result in Student loan cancellation for 72,000 student borrowers; the total amount of the student loan forgiveness is should be around $ 1 billion. The Borrower’s Repayment Defense Program allows federal student loan borrowers to seek cancellation of their student loan if their school has engaged in unfair, deceptive or predatory behavior.
The borrower’s repayment defense program only provides relief for federal student loans, but not for private student loans, underscoring the importance of outcomes like Shapiro’s in providing relief to private borrowers. Advocates for student loan borrowers have called on the Biden administration to go much further in resolving outstanding student debt, especially student loans linked to predatory schools, in light of the limitations of the defense program borrowers.
“What we need from the Department of Education is an overhaul of the current borrower advocacy process,” Toby Merrill, director of the Predatory Student Loans Project, said in a statement following. recent changes made by the administration to the borrower advocacy program. “The Biden-Harris administration must now remedy these failings or else perpetuate a system that opposes the very students it is meant to protect.”