$ 2.6 million in private student loans to be forgiven following settlement: key details


A settlement agreement with a private buyer of student loan debt following the collapse of a for-profit college chain will result in a student loan forgiveness of $ 2.6 million for former students.

Pennsylvania Attorney General Josh Shapiro announced the deal yesterday. The settlement agreement was with Elevation Capital Partners, LLC, a student loan purchasing entity that acquired private student loans granted to students who attended the offices of the Brightwood Career Institute 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 out the outstanding private student debt associated with the company.

“When the Education Corporation of America closed, it left thousands of Pennsylvanians without a degree and a huge financial burden. Today we made a deal 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 agreement 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 overall financial situation 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 to the federal borrower defense program that will result in the cancellation of student loans for 72,000 student borrowers; the total amount of student loan cancellation is expected to be around $ 1 billion. The Defend Borrowers Against Repayment program allows federal student loan borrowers to request cancellation of their student loans if their school engages in unfair, deceptive, or predatory behavior.

The Defend Borrowers Against Repayment program, however, only gives relief to federal student loans, but not to private student loans, underscoring the importance of outcomes like Shapiro’s in relieving borrowers of private student loans. Advocates for student loan borrowers have called on the Biden administration to go much further in dealing with outstanding student debt, especially student loans linked to predatory schools, in light of the limitations of the borrower advocacy program .

“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 either remedy these failures or else perpetuate a system that is stacked against the very students they are meant to protect.”

Further reading

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