AG Shapiro seeks tuition debt relief
$6.7M settlement would repay the loans of those underserved by for-profit colleges
The state Attorney General’s office is proposing a $6.7 million settlement that will repay the educational debt incurred by 1,200 Pennsylvania college students who it says were underserved by a for-profit college system, which includes the former Everest Institute on Stanwix Street, Downtown.
Attorney General Josh Shapiro announced Thursday that the proposed settlement with defunct investment firm Aequitas Capital Management has been filed in federal court in Oregon. Aequitas holds student loan accounts related to the new defunct Corinthian Colleges, a large for-profit chain of 30 schools that filed for bankruptcy in 2015.
The $6.7 settlement filed by Pennsylvania is part of a broader settlement worth $192 million in debt relief for former Corinthian College students across the country. Once approved by the Oregon court, the settlement agreement will be filed in Pennsylvania by the Office of Attorney General’s Bureau of Consumer Protection.
In Pennsylvania, Corinthian operated the Everest Institute in Bensalem, Bucks County, and in Pittsburgh; and Wyotech, which was later bought by an unrelated entity, in Blairsville, Indiana County.
“Aequitas and Corinthian Colleges engaged in predatory practices that preyed upon students trying to better themselves through education,” Mr. Shapiro said.
“This proposed settlement will provide badly needed debt relief for 1,200 Pennsylvania students. I will continue to protect Pennsylvania college students and their families by holding these for-profit institutions and lenders accountable for their deceptive practices.”
Once the court has approved the settlement, students in Pennsylvania with the loans from the Corinthian Colleges will receive notice their debt has been forgiven.
The original investigation into the deceptive loans and dealings between Aequitas and Corinthian was conducted by the federal Consumer Financial Protection Bureau. The probe revealed the private student loan program, funded by Aequitas and offered to Corinthian students, was a facade to comply with federal rules meant to ensure for-profit schools don’t receive more than 90 percent of their revenue from the U.S. Department of Education loan and grant programs.
Mr. Shapiro recently signed onto the lawsuit filed against Education Secretary Betsy DeVos and the U.S. Department of Education. The lawsuit challenges the Department of Education’s decision to abandon federal rules protecting college students from abusive loan practices by higher education institutions like Corinthian.