Imagine a helicopter pilot school that goes from nothing to 34 branches and more than 2,000 students in six years. Students pay $69,000 tuition in exchange for a promise that they will graduate with a pilot’s license, an instructor’s license, and maybe even a job at the school itself–hmmm. I hesitate to use the word “pyramid” here.

Anyway, the school went broke back in February 2008. A lot of students paid their tuition but got nothing in return. Washington Attorney General Rob McKenna and colleagues in other states have worked out a deal that will enable those students to get most–but not all–of their money back. The press release:

Silver lining for former Silver State Helicopter students
Attorneys general negotiate settlement to partially erase student loan debt
SEATTLE – A year after Silver State Helicopters declared bankruptcy – leaving its former students with sky-high loan debt – a group of attorneys general has handed over a golden parachute.
“We can finally see the silver lining for Silver State Helicopters students who were left in the lurch,” Washington Attorney General Rob McKenna said.
Under an agreement with 12 states, Student Loan Xpress will forgive a total of $112.7 million in debt for students who obtained private educational loans to attend the defunct flight school.
The Washington Attorney General’s Office served on the executive committee that helped negotiate the agreement, which was reached in conjunction with a national private class action settlement also announced today. Washington will file its version of the agreement in the next few days in Thurston County Superior Court. The agreement doesn’t include a finding or admission of wrongdoing by Student Loan Xpress.
Silver State Helicopters began operating in 2002 as a small pilot training school near Las Vegas. At its zenith, it operated 34 flight schools nationwide with a total of 2,700 enrolled students.
From 2005 to 2007, Student Loan Xpress served as the preferred lender for students attending Silver State Helicopters, providing approximately $174 million to more than 2,300 people nationwide. When the school closed abruptly in February 2008, most students were left owing Student Loan Xpress serious money for training and certifications they never received.
More than 100 Washington students attended the flight school. The Washington Attorney General’s Office received 34 consumer complaints about the company last year, which show that many Silver State customers paid $69,900 each for the promise of earning a commercial pilot’s license and flight instructor rating. Students were often told that upon completion, they would be hired by Silver State itself.
Students alleged that the training provided by Silver State was inadequate, compounded by a lack of teachers, too few flight simulators and a lack of helicopters. As a result, many students dropped out.
The states’ settlement includes a provision that Student Loan Xpress forgive debt for students who are deemed eligible for relief and participate in a private, nationwide class-action settlement, Holman et al v. Student Loan Xpress, Inc., filed in federal court in Florida. Students who have question about the class-action settlement can contact settlementquestions@gmail.com.
Just over half of the students who enrolled never earned a certificate. Under the agreement, Student Loan Xpress will forgive 75 percent of the total amount borrowed by those students. Students who earned one or more certificates will also receive some relief. Students will still be required to make payments on the remaining loan balance.
The states’ agreement also precludes Student Loan Xpress from reporting negative information to credit-reporting agencies about students who failed to make payments on their loans prior to the settlement.
Student Loan Xpress must provide written disclosures to each prospective borrower whenever it acts as the exclusive private loan provider for students of a private post-secondary, trade or vocational institution not certified or accredited by state or federal authorities. Those disclosures must state that the loans do not constitute an endorsement of the school, its principals or the quality of training.
AGO NEWS: Silver lining for former Silver State Helicopter students

This entry was posted on Tuesday, October 27th, 2009 at 1:57 pm and is filed under Consumer. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.