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For a long time we have known that KeyBank has played a leading role in aiding and abetting the efforts of . What we didn’t realize, however, was the integral role that KeyBank played in fueling the growth of , an unlicensed and unaccredited Nevada-based flight-school chain that left its 2,500 students in the lurch on Super Bowl Sunday and filed for bankruptcy liquidation. Most of these students are now stuck having they did not receive.

Thanks to , we recently learned that KeyBank was Silver State’s exclusive private student loan provider from 2002 to 2005, a time when the flight-school chain grew by “an astounding 2,786 percent.” KeyBank appears to have severed its ties to Silver State in 2005, forcing the flight-school chain to find other lenders to provide private loan funds to its students. , Silver State then forged an exclusive arrangement with and the Pennsylvania Higher Education Assistance Agency (PHEAA), to make and service the loans.

KeyBank’s involvement with Silver State is far from the first time the Cleveland, Ohio-based national lender has assisted the efforts of sham trade schools to scam students.

These practices first came to light several years ago , leaving their students with heavy private loan debt. Just like Silver State, these schools (owned by now-defunct chains such as , , and , among others) had forged sweetheart deals with KeyBank and to provide their students with tens of thousands of dollars of private loans to cover the full cost of tuition before any classes were provided.

In , the consumer lawyer explained how the easy availability of private loans helped disreputable schools thrive by allowing them to attract students without having to worry about enrolling in the federal student loan programs and the government regulation such participation entails.

Under pressure from consumer advocates and some state regulators, Sallie Mae eventually agreed to provide some repayment relief to the students left in the lurch after these computer schools unexpectedly shut down. KeyBank, on the other hand, has vigorously (and often successfully) resisted shafted students’ demands for debt forgiveness for classes they never attended. In doing so, the corporation has systematically denied borrowers from the most predatory practices of lenders.

Now it turns out that KeyBank’s focus has not just been on providing liquidity to unlicensed and unaccredited computer schools but also to unregulated flight schools as well. Silver State appears to be only the tip of the iceberg. According to the class-action lawsuit, KeyBank provided private loans to students attending the , as well as and in Norman, Okla. — all of which shut down unexpectedly, leaving students with a heavy debt load and without the training needed to become certified pilots.

As part of the class-action lawsuit, lawyers for the Silver State students accuse KeyBank of violating the federal by using the “U.S. mail and wires” to engage “in a deliberate pattern and practice of aiding and abetting fraudulent vocational schools that aggressively induce students into obtaining loans with KeyBank.”

We do not know if this line of argument will prevail. But at Higher Ed Watch, we firmly believe that federal and state regulators, as well as policymakers, need to understand the essential role KeyBank played in the proliferation of sham schools, and the harm that the bank, in providing liquidity to these disreputable schools, has done to countless low-income and working-class students who were just trying to better their lives.

In future posts, we will take a closer look at the tactics that KeyBank and other private-loan providers have used to erode key consumer protections for borrowers. Stay tuned.