Consumer Finance Insights
March 29, 2016

Massachusetts AG Announces Defrauded Student Borrowers Are Eligible for Debt Relief

On March 28, the Massachusetts Attorney General (“AG”), together with the U.S. Secretary of Education, announced that more than 2,000 students who were allegedly defrauded​ by a national for-profit college are eligible to have their federal loans forgiven.

In November 2015, the AG had submitted an application to the U.S. Department of Education (DOE) for the immediate discharge of all federal student loans taken out by 7,200 borrowers attending a for-profit college between 2007 and 2015, asserting that the college violated state law and obtained federal loans from its students without providing educational services.  In that application, the AG maintained that debt forgiveness was necessary because the institution had declared bankruptcy, and was thus unable to make payments on a default judgment that the Consumer Financial Protection Bureau entered against it in October 2015.

Presently, this group of Massachusetts borrowers is the largest group of borrowers eligible for loan relief from the ongoing investigation into the college.