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Thursday, February 22, 2024
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Debt Forgiveness: Sales Class Graduates Deceived into Receiving Over $30 Million in Student

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Debt Forgiveness A Delaware bankruptcy judge has issued a court order mandating the permanent shutdown of Prehired, a 12-week sales bootcamp accused of using illegal and predatory loan practices. The federal government, along with 11 state attorneys general, filed a lawsuit against Prehired, alleging that the company deceived students with promises of six-figure salaries and guaranteed jobs, leading them to agree to illegal loans. The court order requires Prehired to provide more than $30 million in debt forgiveness to hundreds of former customers who were allegedly “kept in the dark” about key loan information.

Deceptive Practices Unveiled

According to the Consumer Financial Protection Bureau (CFPB), Prehired charged up to $30,000 for its three-month bootcamp program. Students unable to afford this cost were encouraged to enter into income-share loans. The company allegedly falsely promised that students would not have to repay anything until they earned at least $60,000 annually. Between January 2018 and April 2022, over 1,000 students enrolled in Prehired’s program, with hundreds entering into income-share agreements.

Coordinated Legal Action: Debt Forgiveness

The court order, announced by the CFPB and 11 state attorneys general, aims to address deceptive debt collection practices employed by Prehired. The company allegedly transferred loans to affiliated entities and attempted to collect debts in a distant forum without adequate disclosure. Prehired is accused of misleading consumers into signing settlement agreements with little benefit.

Legal Consequences: Debt Forgiveness

Judge John Dorsey signed a stipulated judgment requiring Prehired to refund over $4 million to student borrowers who made payments on income-share loans between May 2019 and March 2023. Additionally, outstanding loans valued at nearly $27 million were canceled. The court’s decision is seen as a significant development in holding organizations accountable for predatory practices in the education and training sector.

Future Implications

The legal action against Prehired adds to the growing skepticism surrounding income-share agreements, once considered a potential solution to the student loan crisis. While initially praised for their innovative approach, income-share agreements have faced increased scrutiny and legal challenges due to predatory practices. The Prehired case underscores the need for regulatory oversight and consumer protection in alternative education financing models.

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