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Student Loan Xpress will waive $112.7 million of the $174 million owed by students of defunct Silver State Helicopters under an agreement announced Tuesday by Attorney General Jerry Brown and his counterparts in 11 other states.
California students will get about $25.5 million in debt relief, Brown's office said.
Silver State, founded in Las Vegas in 2002, operated flight academies in 17 states. The branch at McClellan Business Park had about 200 students when the company parked its helicopters and filed for Chapter 7 bankruptcy in February 2008.
Students borrowed an average of $69,900. Their debt relief will depend on how much progress they made in their training: The more Federal Aviation Administration certifications they got, the less debt relief they'll get.
The average student will have $46,016 in debt waived.
Brown, in a news release, said the agreement will save students from "a mountain of debt for training they never received."
But Brandon Thomas, 23, a student at Silver State's McClellan site, called the accord inadequate. Thomas, who received no FAA certifications, will have 75 percent of his loan waived, leaving him thousands of dollars in debt.
"I should get 100 percent (forgiveness), you know," said Thomas. "It doesn't seem right."
Brown and attorneys general in other states began investigating after Student Loan Xpress, which lent money to most of Silver State's students, demanded full repayment.
Brown's office said Student Loan Xpress "had reason to believe that the school was in serious financial difficulty" before it made its first loan. "Students complained of a shortage of instructors, flight simulators and helicopters. Only 10 percent of Silver State students graduated."
Student Loan Xpress made no admission of wrongdoing. Curt Ritter, spokesman for parent company CIT Group, said the settlement provides "substantial debt forgiveness to the borrowers."
Students can contact the settlement administrator at settlementquestions@gmail. com, or call Brown's office at (800) 952-5225.
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Call The Bee's Dale Kasler, (916) 321-1066. Read his blog on the economy, Home Front, at www.sacbee.com/blogs.
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