The Attorney General of California has reached a settlement with a company that was attempting to collect on student loans made to individuals attending Corinthian Colleges after alleging that the company engaged in illegal debt collection activities.
The company, Balboa Student Loan Trust, will stop collecting on about 35,000 loans, and the remaining balances will be forgiven, according to the settlement. As well, the company will return about $500,000 in payments that have been made by individuals since August 1, 2017. In total, the total amount of debts and penalties amount to $67 million, according to the AG’s office.
Corinthian College was a for-profit university that shut down in 2015 after allegations that it targeted low-income individuals by making false representations about job placement rates. Students were saddled with student loan debts that they could not afford to repay.
Balboa was accused by the Attorney General of Balboa mistakenly sending borrowers collection letters that threatened legal action if their loan balances remained unpaid.
In announcing the settlement. Xavier Becerra, the Attorney General of California, did not miss a chance to take a shot at the Department of Education and Education Secretary Betsy DeVos.
“In the coming weeks, thousands of defrauded Corinthian students will receive a letter in the mail informing them that their loans have been fully forgiven. We hope this delivers some measure of closure and peace of mind,” Becerra said in a statement
