Home > News > CitiBank Offering 100% Loan Forgiveness on Silver State Helicopters Loans

CitiBank Offering 100% Loan Forgiveness on Silver State Helicopters Loans

*Update – A commenter has provided a lot of additional information on this issue; I encourage readers of this post to check out the comments section. 

Michael Berger, one of the lawyers in the lawsuit against Silver State Helicopters Flight Academy, reported on his blog November 10th that one of the lenders in the case, Citibank, is now offering students 100% loan forgiveness on loans taken out to attend the now-bankrupt school in exchange for being released from future claims.  From his web-site:

On November 5, 2008, Citibank began offering 100% loan forgiveness of Citibank SSH student loans in exchange for an assignment of the student’s claims against SSH and against Citibank. We highly recommend that all of our clients with Citibank loans accept this offer. 100% Loan forgiveness has always been our highest goal for each and every one of our SSH clients. It is a complete victory for each and every one of our Citibank clients. It sets the bar high for KeyBank and Student Loan Xpress, the 2 other banks that wrote the majority of the SSH student loans.

I don’t know much about this case, but apparently Silver State had students pay tuition, approximately $70k, up front using loans that the school helped them arrange through private lenders.  The school wound up declaring bankruptcy in February of this year, leaving hundreds of students in the lurch.  Berger’s firm has been investigating whether there was collusion between the school and student loan lenders.

  1. Randy
    November 14, 2008 at 6:10 pm

    “Now, onto Citibank’s settlement offer. The letter that just went out was an initial offer made by the bank. In real estate, we almost always have a counter offer unless the deal is too good to be true. An initial offer is usually in the favor of he who makes the offer (and why shouldn’t it be?). If the other party agrees to the terms of the initial offer, whom do you think wins? I hope no one made a knee jerk decision to sign and send that offer back to Citibank without discussing it, in detail, with an attorney.

    I have discussed this letter with a few lawyers and they raised questions concerning the second sentence of the second paragraph: “While you remain obligated to repay those amounts to Citibank under the promissory note you signed, Citibank will agree not to seek collection…”

    * Are they going to sell the loans to a third party collection agency who will then attempt to collect the debt (Citibank is not promising NOT to do so)?

    * Are they “forgiving” / canceling the loan completely, thereby erasing the debt from your credit reports or are they merely internally designating the loans as “Charged Off” leaving a $70,000 debt as unresolved in the view of the credit reporting agencies?

    * Are they sending a 1099 report to the IRS or will this be a settlement of a disputed debt?

    Here are a few more tidbits of information:

    * There are three major players in the student loan community that are affected by Silver State: Key Bank; AES Student Loan Xpress; and Citibank, in order of appearance as lenders to SSH students.

    * Citibank was the last to join the fray They are a big company and had only committed less than $8,000,000. In the scheme of things, for the largest bank in the world, this amount is barely a drop in the bucket considering today’s economic situation. In the face of actual and threatened individual and class action lawsuits that might uncover their lack of professional investigative abilities or possibly even fraud, this small sum is easy to walk away from. And consider the cost of the attorneys that will be needed to try the case. Eight mil isn’t worth chasing. Also, Citibank may possibly get money back from the bankruptcy because some of the money it gave to SSH was not disbursed, so not subject to claims from other creditors.

    * AES / SLX is a smaller company with a lot more to lose and has invested over $200,000,000 (yes, that’s over two hundred million dollars).

    * I don’t have Key Bank’s numbers, but remember, they were first up to help students with funding and they got out when they saw the problems with SSH.

    This is why I stated, don’t read into Citibank’s actions and don’t try to read between the lines. For those of us with attorneys, let them do their jobs for us. For those of us who are SLX borrowers anywhere in the country, we are represented by the class action law firms in both California and Florida. We need to let then do their jobs. For Key Bank students in California and Nevada, you are represented by the California class action law firm, as well.

    Citibank has given some of you a few weeks to make a decision. Wait until your attorneys contact you personally before you act.”

  2. studentloanstories
    November 14, 2008 at 7:02 pm

    Thanks for your comments, Randy. I think they are very helpful, and I appreciate you shedding more light on this issue.

  3. August 9, 2011 at 6:01 pm

    Anything new ? My son went 2 sessions but in the settlement they want 60,000. Also I don’t remember agreeing to the class action laesuit. By The way we are in Missouri.

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