Font ResizeA student-loan operator will forgive $112.8 million in loans to some 2,300 flight students of Silver State Helicopters, including dozens who studied at the now-bankrupt flight school's Utah locations.
The students, who were saddled with staggering debt with little training to show for it, will have up to 75 percent of their debt to Student Loan Xpress, a subsidiary of CIT Group, erased under the agreement reached between the company and 12 states' attorneys general.
"Silver State students' dreams were grounded when the school failed to deliver on their education and left a trail of costly loans in their wake," said Francine Giani, executive director of the Utah Department of Commerce, in announcing the agreement Tuesday.
"We do not regulate lenders but we so appreciate the role a lot of people played in pulling this lender into these discussions. They are doing the right thing," she added. "This occurred at a time when money was being thrown around and not watched as closely as is should have been. It's a good conclusion for the young people left holding the bag."
The Nevada-based Silver State enjoyed rapid expansion after its launch in 2002, eventually enrolling 2,700 students in 34 locations around the country. But the school had a poor record of graduating students and went bankrupt in February 2008.
The Utah Division of Consumer Protection soon released the school's $187,500 bond to some of the 86 students who filed complaints,
Student Loan Xpress was Silver State's preferred provider, issuing $174 million in loans between 2005 and 2007, according to a Department of Commerce press release.
Although the lender is authorized to issue federally subsidized loans, Giani believes most of the loans involving Silver State were private, which carry much higher interest rates. The firm has not accepted applications for new loans since April 2008.
The amount of debt each student will have forgiven depends on how much of their training was completed at the time Silver State went under. The agreement also bars Student Loan Xpress from conveying negative information about borrowers to credit-reporting agencies.
The Silver State bankruptcy is the subject of a class-action lawsuit. For more information, e-mail settlementquestions@email.com.
