The Pennsylvania Attorney General recently entered into an Assurance of Voluntary Compliance with Elevation Capital Partners, LLC, a buyer of private student loans, that prohibits Elevation from engaging in any collection efforts, directly or through servicers, related to loans made to Pennsylvania borrowers who attended schools operated by Education Corporation of America (ECA) (ECA Loans). According to the AG’s press release about the agreement, ECA closed its schools in December 2018 due to its loss of accreditation and its failure to meet federal Department of Education financial requirements. Elevation purchased the ECA Loans after the schools’ closure.
The Assurance of Voluntary Compliance includes the recital that “it is the Commonwealth’s position that [the ECA Loans] were procured as the result of ECA’s misrepresentations and material omissions to students prior to its closure related to educational quality, accreditation, career services and the system’s financial condition.” It also includes a recital of certain conduct identified by the AG as “bringing into question the validity” of the ECA Loans, such as federal statistics showing that ECA’s Pennsylvania locations “had relatively high cohort default rates compared to the 2015 national average,” “general misrepresentations made in school catalogs to students regarding the quality of instruction and promised student services,” ECA’s “financial troubles,” and “ECA’s failure to disclose to incoming students that its existing accreditor had lost its recognition as an accrediting body.”
These recitals in the Assurance of Voluntary Compliance are followed by the recital that it is the AG’s position that efforts to collect the ECA Loans would violate the provisions of the FDCPA and the PA Fair Credit Extension Uniformity Act that prohibit the use of false, deceptive, or misleading representations or means to collect a debt, including the false representation of a debt’s character, amount, or legal status.
According to the AG, the agreement will result in the cancellation of approximately $2.6 million in loans owed by 1,300 students. The agreement also requires Elevation to refund payments that it or its servicers have collected on the ECA Loans. In addition to barring collection efforts on the ECA Loans, the agreement prohibits Elevation from selling, transferring or assigning the ECA Loans.