October 27, 2009
Jefferson City, Mo. - Attorney General Chris Koster today announced that Missouri and 11 other states have obtained a settlement with a private student loan provider, resolving an 18-month multistate investigation. Student Loan Xpress will forgive a total of $112.7 million in debt for students who obtained non-government guaranteed educational loans to attend a now-bankrupt helicopter training school, Silver State Helicopters, LLC. Missouri victims will be entitled to over $2.9 million in student loan forgiveness.
"Students are a particularly vulnerable population, and it is a high priority that students who receive financial aid are protected from being unfairly treated throughout the aid process," Koster said. "We are pleased with the result of this multi-state effort and will continue to be vigilant in protecting the rights of Missouri students."
Silver State Helicopters began operating in 2002 as a small helicopter pilot training school and ultimately operated 34 flight schools throughout the country. For at least two years, Student Loan Xpress served as the preferred student lender for Silver State Helicopters, providing approximately $172 million to over 2,800 students nationwide. Records showed that only a small percentage of students graduated and drop-out rates were exceptionally high.
By 2008, Silver State Helicopters had discontinued operations entirely and had filed for bankruptcy. Most students were left owing Student Loan Xpress a substantial amount of debt for training and certifications they never received. The Missouri Attorney General's Office received 53 complaints about the school's bankruptcy and the student loans still owed.
The settlement requires Student Loan Xpress forgive up to 75 percent of the total amount borrowed by the majority of Silver State Helicopters students as part of its resolution of a pending class action. The percentage of loan forgiveness will vary based upon the number of flight certifications each student obtained.
In addition to the loan forgiveness, the agreement includes several terms of injunctive relief, which will preclude Student Loan Xpress from providing negative information to any credit reporting agencies about settling students who failed to make payments on their loans prior to the settlement. Further, in the future, where Student Loan Xpress acts as the exclusive private loan provider to students of a private post-secondary, trade or vocational institution not certified or accredited by state or federal authorities, the company must provide written disclosures to each prospective student-borrower stating the loans do not constitute an endorsement of the school, its principals, or the quality of education or training offered.
The related national private class action settlement was filed today in federal court in Florida. Missouri settlement documents will be filed shortly.
The settlement and benefits provided are available generally to students who were attending Silver State as of the date of its closure, February 4, 2008. All inquiries by students regarding settlement and or qualification to be a part of the settlement should be directed to firstname.lastname@example.org.