Press Release  AG Healey Reaches Settlement With U.S. Bank Securing Over $230,000 in Debt Relief for Massachusetts Student Borrowers

BOSTON — Attorney General Maura Healey announced today that her office has reached a settlement with U.S. Bank, acting as an agent for certain lenders, that will result in the discharge of more than $230,000 in private student loan debt held by the company. The debt was incurred by certain students who went to the New England Institute of Art (NEIA), a predatory for-profit school that made false promises and misleading enrollment claims.

Under the assurance of discontinuance, filed in Suffolk Superior Court today, U.S. Bank has agreed to permanently discharge the debt, including principal and interest, and return recent payments made on accounts of certain former students of NEIA.

“Students who went to NEIA have been stuck with unnecessary debt from this predatory school that lured them in with false promises of good-paying jobs,” said AG Healey. “Today’s settlement brings much-needed relief to students struggling with their loans. We remain committed to obtaining relief for students affected by these unfair practices.”

In 2018, the AG’s Office filed a lawsuit alleging, among other things, that NEIA and Education Management Corporation (EDMC) violated the Massachusetts Consumer Protection Act by misrepresenting the likelihood of job placement to prospective students in order to induce enrollment. To finance the high cost of NEIA’s tuition, in addition to taking out federal and private loans, certain NEIA students took out private lines of credit offered by EDMC. U.S. Bank, and the lenders for which it is acting as agent, were not involved in the origination of the lines of credit. The lenders took ownership of the accounts in 2018 to partially satisfy a debt owed to them by EDMC.

In 2019, Suffolk Superior Court entered final judgment against NEIA and EDMC, ordering them to pay restitution of about $60 million plus interest based on the amount of tuition paid by NEIA students. They were also ordered to pay $11,765,000 in penalties.

Under the terms of today’s settlement, U.S. Bank will return more than $30,000 in recent borrower payments to the Commonwealth, which will be distributed as refunds to borrowers who recently made payments, and U.S. Bank will discharge over $230,000 in student loan debt of affected NEIA students.

NEIA students who are eligible for relief under today’s settlement will be contacted by the AG’s Office.

Anyone with questions about this settlement or complaints about their student loans can contact the Attorney General’s Student Loan Assistance Unit at 1-888-830-6277 or file a complaint at www.mass.gov/student-loan-assistance.

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