Student loan borrowers duped by Globe University and the Minnesota School of Business might be able to get rid of their debt due to a ruling last week by the state’s Supreme Court.
The Minnesota State Supreme Court’s July 26th decision could lead to the forgiving of loans that were handed out to roughly 6,000 students. The Minnesota Supreme Court ruled that the for-profit education company broke the law by doling out thousands of loans without a license, as well as illegally charging exorbitantly high interest rates—some loans charged as high as 18 percent. Under Minnesota state law, closed-end loans can have a maximum interest rate of 8 percent.
The schools, owned by Terry and Kaye Myhre, claimed to offer two- or four-year college degrees. They charged up to $42,000 for two years, and $89,000 for four years—and the schools handed out more than $20 million in illegal loans since 2009. The for-profit schools announced in December that they were closing after their federal financial aid access was stopped by the U.S. Department of Education.
While the for-profit schools argued that the money handed out were not actually loans but consumer-credit plans, the Supreme Court disagreed, reversing an earlier ruling by a lower court that dismissed the claims about the loans.
Now, Minnesota Attorney General Lori Swanson is looking to have all of the loans voided, as well as force the schools to refund the money to its former students.
One former Globe student testified that although she took out almost $15,000 in loans, she wound up dropping out before earning her degree and has been having difficulty making the monthly payments towards her debt. But, the AG pointed out that even those who graduated have had issues finding solid employment.
In the meantime, there will be a motion filed to order both schools to alert any students who are eligible for a refund. Borrowers who were affected and would like an update on the case should go to ag.state.mn.us.
This is not the first time a for-profit school has been caught by the authorities for scamming student loan borrowers. As reported by LendEDU, the U.S. Department of Education ruled that the Corinthian Colleges misrepresented employment success rates among students who graduated from the for-profit chain. As a result of the misrepresentations, students who were defrauded by the for-profit chain of colleges are now eligible to have their federal student loan debt discharged.
Author: Dave Rathmanner
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