Attorney General DeWine Announces $10.6 Million in Ohio Student Loans to be Forgiven as Part of Multistate Settlement with For-Profit College Provider
November 16, 2015 - 11:46 AM
Attorney General Mike DeWine along with 39 other attorneys general
today announced that the company behind Brown Mackie College, The Art
Institutes, South University, Argosy University, and Stautzenberger
College has agreed to reform its recruiting and enrollment practices and
forgive about $102.8 million in student loans nationwide, including
over $10.6 million in Ohio.
the multistate agreement, Education Management Corporation (EDMC) will
stop collecting on the accounts of an estimated 80,795 former students,
including over 7,100 from Ohio.
found that many students didn’t understand what they were getting into
and accrued a significant amount of debt without ever getting a degree,”
Attorney General DeWine said. “This settlement will provide relief for
former students and protection for future students.”
the settlement, EDMC agrees to provide greater disclosures to
prospective students and to give students more opportunities to withdraw
without incurring costs.
EDMC, which is based in Pittsburgh, operates 110 schools in 32 states and Canada through its education systems.
attorneys general launched an investigation into the company after
students complained about its recruiting and enrollment practices.
The settlement outlines several changes EDMC must make, including the following.
must provide a single-page disclosure to each prospective student
outlining the student’s anticipated total cost, the median debt and
earnings for those who complete the program, and the job placement rate,
among other information.
must reform its job placement rate calculations to provide more
accurate information about students’ likelihood of obtaining employment
in their chosen field.
students who use federal student loans or financial aid will be
required to utilize an Electronic Financial Impact Platform to provide a
picture of the student’s expected education program costs, debt burden,
and post-graduate income.
must not make misleading statements about accreditation, selectivity,
graduation rates, placement rates, transferability of credit, financial
aid, veterans’ benefits, or licensure requirements.
is prohibited from knowingly enrolling students in programs not
accredited by the state if such accreditation is typically required for
EDMC is prohibited from engaging in deceptive or abusive recruiting practices.
It also is required to record online chats and telephone calls with prospective students.
Orientation and refund provisions:
must require incoming undergraduate students with fewer than 24 credits
to complete an orientation program prior to their first class.
students at ground campuses must be permitted to withdraw within seven
days of the beginning of the term or the first day of class (whichever
is later) without incurring any cost.
students in online programs who have fewer than 24 online credits must
be permitted to withdraw within 21 days of the beginning of the term
without incurring costs.
Third-party vendor requirements:
must require its lead vendors (companies that place online ads urging
consumers to consider new educational or career opportunities) to agree
to certain compliance standards, such as not representing loans as “free
money” and not sharing students’ information without their permission.
will send letters to the former students whose debt will be forgiven
under the terms of the settlement. These former students had fewer than
24 hours of transfer credit, withdrew within 45 days of their first
term, and last attended between 2006 and 2014. A list of the number of expected affected former students by state is available on the Ohio Attorney General’s website.
compliance with the settlement will be monitored independently for
three years by Thomas Perrelli, former U.S. Associate Attorney General,
who will issue annual reports.
in the settlement are the attorneys general of Alabama, Arizona,
Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii,
Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, New
Mexico, New York, North Carolina, North Dakota, Ohio, Oregon,
Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wyoming, and the District of Columbia.
In Ohio, a consent judgment is being presented to the Franklin County Common Pleas Court.
addition to the state case, EDMC also agreed to pay $95 million to
settle a separate federal whistleblower lawsuit under the False Claims
Act. In that case, brought by the U.S. Department of Justice on behalf
of the Department of Education, the government alleged that EDMC
illegally paid incentive-based compensation to its admissions recruiters
tied to the number of students they recruited.
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