Flight-school students gain financial relief

Would-be helicopter pilots who found themselves responsible for student loans but with no license after their flight school was grounded by bankruptcy 20 months ago got some financial relief Tuesday.

Student Loan Xpress, in an agreement with Utah and 11 other states, will forgive a total of $112.8 million in private educational loans it arranged for students to attend classes at Nevada-based Silver State Helicopters.

Most students will be forgiven 75 percent of their loan totals. The remaining students will receive a percentage of loan forgiveness, depending on how much training they completed. Students will be required to make payments on any remaining loan balance.

Former Silver State students are asked to e-mail settlementquestions@gmail.com if they have questions about the agreement.

The helicopter school, which operated flight academies in more than 30 locations, including Ogden and Provo, filed a petition with the U.S. Bankruptcy Court for relief under Chapter 7 in February 2008, but not before the company withdrew the final tuition payment from many of their student pilots' bank accounts.

That left the students owing thousands of dollars in loans for training and certification they never received.

On Tuesday, Francine A. Giani, executive director of the Department of Commerce, announced that the Utah Division of Consumer Protection had signed on to a multi-state settlement agreement to resolve an 18-month national investigation into Student Loan Xpress, a subsidiary of CIT Group.

The Division of Consumer Protection had previously distributed $187,500 in loan repayments to flight-school students through Silver State Helicopters' bond, but the amount fell far short of most outstanding student loans. The division had received 86 complaints about the company's bankruptcy and loans in default.

In addition to Utah, states participating in the agreement are Nevada, California, Florida, Georgia, Idaho, Illinois, Missouri, Montana, Oklahoma, Oregon and Washington. A related national private class-action settlement was also filed in federal court in Florida.

Between 2005 and 2007, Student Loan Xpress served as the preferred student lender for Silver State Helicopters, providing approximately $174 million to more than 2,300 students nationwide. Records showed that only a small percentage of students graduated, and dropout rates were exceptionally high.

e-mail: mhaddock@desnews.com