An investigation by the state attorney general’s office claims that a loan company engaged in illegal debt collection practices, which will lead to almost 35,000 former Corinthian College students in California to have the remainder of their private loan balances forgiven and some may receive payment refunds. Last month, state Atty. Gen. Xavier Becerra claimed that forgiveness of the remaining balances on the 34,971 accounts owned by Balboa Student Loan Trust will total $67 million in debt relief. The investigation by the attorney general’s office into Balboa’s debt collection practices took a year to complete. Becerra stated the following at a news conference,
All too often, unfortunately, there are unscrupulous players who engage in unscrupulous practices in some of our postsecondary education institutes, and there are lenders in cahoots that do the same thing.
According to a complaint filed last month in Los Angeles County Superior Court, Corinthian Colleges directed students toward high-interest private student loans. After Corinthian Colleges began to face federal scrutiny over its job placement rates, the for-profit chain sold almost all those loans to another company, which then transferred them to Balboa. According to the complaint, Balboa wrongly sent borrowers overdue notices that threatened legal action if their loan balance remained unpaid. However, Balboa had previously agreed to debt collection limitations that barred the company from threatening legal action.
Under the terms of the settlement, Balboa will immediately halt debt collections and will refund all payments made by Californians since Aug. 1, which is over $500,000. According to the Los Angeles Times, Balboa is also required to refund additional payments made before Aug. 1 by California borrowers who received the debt collection notices, which totals about $84,000. The company also has to delete all negative credit reporting associated with those loans. This is definitely good news for former Corinthian College students in California that have been struggling to repay their remaining private loan balance.
