Private student loans will be forgiven for almost 3,000 students who attended some North Carolina schools. The settlement involved Education Management Corporation (EDMC), which operates Raleigh and Charlotte locations of The Art Institute, in addition to more than 100 schools in North America.
The EDMC settlement arose out of allegations that the organization violated provisions in the False Claims Act on both federal and state levels. Courts found that EDMC declared itself compliant under a portion of the Higher Education Act, but in fact did not meet compliance. Statements released from the Department of Justice reveal that some students enrolled in programs they were not qualified for, and the institution permitted enrollment to make a profit. This resulted in many students who did not complete programs and instead left school with college debt and no certification or degree.
Who might be eligible for debt relief in North Carolina? Those who attended and dropped out of The Art Institute in Raleigh or Charlotte between 2006 and 2014. More than 70,000 students nationwide will also have debts forgiven.
Many individuals carry the burden of student loan debt for a long time. Depending on their circumstances and where they reside, some graduates and former students have a difficult time qualifying for property loans or making basic living expenses because student loan payments require the bulk of their finances. Sometimes these individuals seek debt relief for student loans. There are several ways to manage debt:
Bankruptcy. Filing for bankruptcy is a challenging way to discharge student loan debt. Learn more about a 2013 ruling that made it possible for a student to discharge their student loan debt through bankruptcy. This is a difficult, but potential solution. Read about the debts that are not dischargeable via bankruptcy.
Loan forgiveness programs. The U.S. Department of Education offers a loan forgiveness program. According to the Federal Student Aid office, "The Public Service Loan Forgiveness Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer." (Many other programs are available on state and federal levels, but do your due diligence and be mindful of scams.) Consult with an attorney regarding tax consequences that may be associated with this option. The government might view forgiven debt as income - an attorney can explain more.
Settlements. Just like the recent EDMC settlement explained above, other closed and pending cases offer consumers debt relief.
Assistance. Student repayment assistance programs help set up manageable payment schedules that provide more freedom to the debt holder.
Another item to consider: Private and public loan debt is managed differently. The EDMC case addresses private debt and will relieve about $1,370 on average per debt holder.