AUSTIN – More than 4,000 Texan students who were unwittingly part of an alleged scam involving student loans have been released of their requirement to pay back the money.
The students had taken out the money to attend Corinthian College, which had allegedly partnered with Aequitas in a complex private loan scheme.
“The Aequitas Parties funded and maintained a private student loan program offered to Corinthian students, which enabled Corinthian to present a facade of compliance with federal laws requiring that a certain portion of a for-profit school’s revenue come from sources other than federal student aid,” the Assurance of Voluntary Compliance (AVC) filed by the Texas Attorney General's Office in the Travis County District Court on Aug. 18 stated.
The AVC means that students who were convinced to take out the loans will see more than $17 million in debt relief, according to a press release from Attorney General Ken Paxton's office.
Texas Attorney General Ken Paxton
“Students are among Texas’ most valuable resources, and my office will act to protect them from deceptive practices,” Paxton said in the press release. “This settlement provides relief to Texans victimized by a student loan program that took advantage of their aspirations to further their education.”
The alleged scheme didn’t just target Texas students. In total, the agreement saw $192 million in relief for students across the country. It has been estimated that 41,000 students may have some or all of their student loans erased.
Corinthian reportedly operated more than 100 schools. In Texas, Corinthian had been running as Everest College and had campuses in Houston, Dallas/Fort Worth, Austin and San Antonio.
The school announced it would close in April 2015 and students and regulators sued Corinthian.
There were 12 other states involved in the investigation including Connecticut, Illinois, Iowa, Kentucky, New York, California, Florida, Maryland, Oregon, Pennsylvania and Washington.
Aequitas has been placed under receivership and the court document noted that the receiver appointed had cooperated with the investigation.