Massachusetts AG Reaches Settlement with Bank to Provide Student Loan Debt Relief

On May 28, 2021, Massachusetts Attorney General Maura Healy (Massachusetts​ AG) announced a settlement with a bank, acting as an agent for lenders, which requires the bank to permanently discharge debts and return payments made by certain former students of a regional for-profit university.  The settlement requires the bank to refund over $30,000 in recent loan repayments made by certain Massachusetts borrowers and to discharge over $230,000 in student loan debt.  The settlement resolves allegations from a 2018 lawsuit brought against the for-profit university and its parent company alleging violations of the Massachusetts Consumer Protection Act.  In the lawsuit, the Massachusetts AG alleged the university and its parent company misrepresented potential students’ job prospects to encourage enrollment.  According to the Massachusetts​ AG, to finance tuition, certain students took out private lines of credit offered by the school’s parent company.  The bank providing the consumer relief was not involved in the origination of the student loans, but it and the lenders it represented acquired the loan accounts in partial satisfaction of a debt owed by the original financer.