On April 6, 2021, the Pennsylvania Attorney General (Pennsylvania AG) announced that it reached an agreement with a Texas-based debt buyer concerning a portfolio of student loan debt it purchased from a now-defunct for-profit college.
According to the Pennsylvania AG, the debt purchaser purchased the portfolio of loans after the for-profit college abruptly closed in December 2018 due to its loss of accreditation an failure to meet Department of Education financial requirements. Because the loans were originated by for-profit colleges that allegedly misrepresented their educational quality, accreditation, career services, and financial condition, the Pennsylvania AG claimed that any effort to collect on the loans would violate the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and various state consumer protection laws.
Under the agreement, the debt buyer is required to forgive more than $2.6 million in private student loans held by 1,300 students and provide refunds of loan payments back to the borrowers. The agreement also permanently bars the company from engaging in any debt collection practices in relation to these student accounts.
The debt buyer recently settled with the Maryland AG for $2.6 million to resolve similar allegations relating to the same for-profit college.