On November 16, 2020, the Maryland Attorney General (Maryland AG) announced a settlement with a Texas-based debt buyer regarding a portfolio of student loan debt the buyer purchased from a court-appointed receiver following the closure of a for-profit college.
The $2,622,877 settlement immediately discharges any outstanding loans and refunds 75% of the payments the debt buyer or its servicers received. Under the terms of the agreement, the debt buyer also must request the removal of any negative information from the credit reports of affected borrowers.
According to the Maryland AG, the loans were originated by a for-profit college who misled students about its accreditation status, post-graduation employment services, faculty, and facilities. The for-profit college lost its accreditation status in 2018, and closed without notice to students. The court-appointed receiver managing the for-profit college’s assets then sold a portfolio of student debt to the debt buyer. The Maryland AG faulted the court-appointed receiver, noting that the loans should have been cancelled upon the school’s closure.
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