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Thursday, November 26, 2015

Schneiderman Strikes Again: For-Profit College Chain Must Forgive $102 Million In Student Loans

A major for-profit college company reached a settlement with more than three dozen state attorneys general on Monday, and will now be required to forgive more than $102.8 million in outstanding loan debt held by more than 80,000 former students across the country.Education Management Corporation, or EDMC, reached the settlement with the New York Attorney General Eric Scheiderman’s office, along with 38 other state attorneys general, including the District of Columbia. Schneiderman alleged that EDMC — which owns the Art Institutes, Argosy University, and Brown Mackie College — used “high-pressure” recruitment tactics, misrepresented the educational benefits the colleges offer, gave inaccurate information about some of their programs’ accreditation, and misrepresented job placement rates and graduation rates. Back in May, EDMC announced it would gradually shut down 15 of 52 campuses of The Art Institutes.
“EDMC preyed on the hopes and dreams of New York students, and ripped off taxpayers, who backed federal student loans that were destined to fail,” Schneiderman said in a statement.
As part of the settlement, EDMC does not have to admit to the conduct alleged by attorneys general. Under the consent judgment, the schools will be mandated to add certain disclosures, provide a longer period of time for students to withdraw without financial obligation. Students will no longer be allowed to enroll in unaccredited programs.
It’s especially important for students to be able to withdraw without financial obligations. As Art Institute graduates said, they would have withdrawn much sooner if not for financial responsibilities, because they realized they were receiving a poor quality of education after only one or two semesters there.
Graduates of the Art Institutes continue to organize to raise awareness for loan forgiveness and warn prospective students to stay away from EDMC colleges. The agreement does not allow for automatic relief for all students, since students have to meet certain criteria, such as dates of attendance and the number of transfer credits they have. Students must have attended between January 1, 2006 and December 31, 2014, been enrolled in a program with fewer than 24 transfer credits, and withdrawn within 45 days of the first day of their first semester or term at the school.
Sanders Fabares, a graduate of The Art Institute of San Diego, spoke at a public hearing on defense to repayment options in San Francisco held by the U.S. Department of Education. The department chose a “special master” to create a special process for defense to repayment.
The special master, Joseph Smith, who has experience with mortgage settlement claims, released a progress report every few months. During the last progress report, which was released to the public in September, Smith was asked about whether the department would consider for-profit college graduates besides those who attended for-profit colleges under the Corinthian College Chain, but at that point, he said the team hadn’t yet considered how other for-profit college graduates would factor into the debt forgiveness plan.

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