A student loan company has agreed to forgive almost $113 million in debts for students of a Nevada-based helicopter flight school that folded in February 2008, attorneys general and a state official said Tuesday.
"We can finally see some relief for Silver State Helicopters students who were left in the lurch by the bankruptcy of the company," Nevada Attorney General Catherine Cortez Masto said after a class-action settlement was approved by a federal judge in the Middle District of Florida.
The $112.7 million agreement involved 12 states and Student Loan Xpress, a member company of New York-based CIT Group Inc. Jennifer Altfeld Landau, a Los Angeles-based attorney for Student Loan Xpress, declined immediate comment. A spokesman for CIT Group did not immediately respond to a message.
California Attorney General Jerry Brown and Utah Department of Commerce chief Francine Giani also announced the settlement, which Giani noted requires the loan company to forgive 75 percent of the amount borrowed by the majority of Silver State Helicopter's 2,700 students.
The percentage of loan forgiveness varied by the amount of training that students successfully completed, she said.
"These students did not obtain the helicopter instruction they were promised," Brown said in a statement, "yet Student Loan Xpress insisted that they pay off the full cost of their tuition. Without this agreement, Silver State flight school students would face a mountain of debt for training they never received."
The case is Holman et al v. Student Loan Xpress. Other states involved in the settlement included Florida, Georgia, Idaho, Illinois, Missouri, Montana, Oklahoma, Oregon and Washington.
Masto said a class action administrator will handle the loan forgiveness process and lawyers planned to contact eligible students. Brown said student borrowers with questions could contact the administrator by e-mail at settlementquestions(at)gmail.com.
Silver State Helicopters was founded near Las Vegas in 2002, and grew from a small pilot training school in 2002 to operate 34 flight schools nationwide.
Student Loan Xpress was the school's preferred student lender from 2005 to 2007, Masto said.
Jerry Airola, the millionaire founder and former company owner, lost a 2006 election bid for sheriff in Clark County and Las Vegas. The company filed for Chapter 7 liquidation 15 months later.
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