Flight students catch break

Hundreds of former Silver State Helicopters students left on the hook for thousands of dollars in loans when the flight school closed last year could get some relief under a settlement with a student loan company.

In the class-action settlement announced Tuesday, Student Loan Xpress has agreed to forgive more than $112 million in outstanding loans to students who were attending the North Las Vegas-based flight school when it suddenly closed and filed for Chapter 7 bankruptcy in February 2008.

The closure of 34 schools nationwide left about 750 employees out of work and roughly 2,700 flight students on the hook for tens of thousands of dollars in loans for training they never received.

The settlement with Student Loan Xpress, which must be approved by a federal judge in Tampa, Fla., would apply to about 2,900 students and loan co-signers, said Andrew August, a lawyer for San Francisco-based Pinnacle Law Group, which helped negotiate the settlement.

Attorneys general from 12 states, including Nevada, helped negotiate the deal.

"We can finally see some relief for Silver State Helicopters students who were left in the lurch by the bankruptcy," Nevada Attorney General Catherine Cortez Masto said in a statement.

Under the deal, the company would forgive 75 percent of the total amount borrowed by students who never received flight certificates. That amount would be reduced for students who received Federal Aviation Administration certifications or ratings before the schools closed.

All students would be required to pay off their remaining loan balances.

The agreement with the attorneys general bars Student Loan Xpress from telling credit reporting agencies about missed loan payments before the settlement.

Student Loan Xpress was the preferred student loan lender for Silver State Helicopters from 2005 to 2007. Citibank, which filled that role from mid-2007 until the company's closing, agreed to forgive 100 percent of its $6 million in student loans.

The schools' preferred lender from 2003 until 2005, KeyBank, has not reached any settlements on its outstanding student loans.

For Joe Hinton, a former Silver State Helicopters student in Phoenix, news of the settlement was little comfort. He owes more than $80,000 in loans and interest to KeyBank.

"I'm glad to hear somebody else is getting out of the terrible situation that myself and so many others are still in," Hinton said.

August said about 220 former students owe on loans from KeyBank.

Hinton and hundreds of former students have sued Silver State Helicopters and its founder, Jerry Airola, alleging they were lured in by false promises and never received the training they were promised.

The loan companies paid the school's $70,000 tuition within months of enrollment, leaving students on the hook if they quit out of frustration at a lack of helicopters and flight instructors.

"They were selling something they could never deliver," August said.

Airola, who unsuccessfully ran for Clark County sheriff in 2006, founded the company in 2002 and oversaw its rapid expansion through the decade.

August called the operation a Ponzi scheme that relied on an influx of money from new students to fuel the growth.

Contact reporter Brian Haynes at bhaynes@reviewjournal.com or 702-383-0281.