The Attorney General of Maryland has announced a settlement between his office and a third-party debt buyer that will result in $2.7 million of debt relief for individuals who attended a for-profit college that lost its accreditation, closed its doors, and had its assets sold by a court-appointed receiver.
The settlement with Elevation Capital Partners involved student loans that were made to individuals who attended Brightwood College, which was owned by Education Corporation of America and enrolled students in low-quality programs at a price significantly higher than comparable programs at public institutions in the state of Maryland.
Elevation Capital will forego collecting on any outstanding loans owned by Marylanders who attended Brightwood and refund 75% of the funds it has already collected. The debt buyer will also ask credit reporting agencies to delete any information about those loans from the credit reports of affected individuals.
“These student loans should have been cancelled immediately when Brightwood College abruptly closed and the students didn’t receive what they had been promised,” said Brian Frosh, the Attorney General of Maryland, in a statement.
Brightwood lost its accreditation in 2018 and Education Corporation of America promptly closed all of the school’s locations. Given the high cost of tuition, students had “little choice” but to take out loans, many of which were made by Education Corporation of America itself. When the schools were closed, a court-appointed receiver sold the rights to collect on the debts to Elevation. The settlement affects about 1,200 residents of Maryland, according to the AG’s office.
