States Win Debt Relief For Students Of Certain For-Profit Schools

Nearly all 50 states, including Arizona, have reached a multimillion-dollar settlement with Career Education Corp. following a five-year investigation by the states’ attorneys general.

The CEC schools involved are: American InterContinental University, Briarcliffe College, Brooks Institute, Collins College, Colorado Technical University, Harrington College of Design, Katharine Gibbs School – Philadelphia, Le Cordon Bleu, Missouri College, and Sanford-Brown Colleges and Institutes.

CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University.

According to the Arizona Attorney General’s Office, as part of the settlement, CEC is agreeing to forgo any and all efforts to collect amounts owed to CEC by former students residing in the participating states, including more than $22 million for over 6,000 eligible Arizonans who attended specific schools (including online courses).

CEC has agreed to reform its recruiting and enrollment practices and forgo collecting about $493.7 million in debts owed by 179,529 students nationally.

CEC is a for-profit education company that operated schools across the country, including multiple campuses in Arizona that are no longer in business. The state attorneys general allege CEC engaged in a number of unfair and deceptive practices for years, including misleading prospective students about actual costs, the transferability of credits, accreditation, program offerings, and accurate job placement rates.

The investigation by the attorneys general revealed evidence demonstrating that CEC:

  • Deceived students about the total costs of enrollment by instructing its admissions representatives to inform prospective students only about the cost per credit hour without disclosing the total number of required credit hours;
  • Misled students about the transferability of credits into CEC from other institutions and out of CEC to other institutions by promising on some occasions that credits would transfer;
  • Misrepresented the potential for students to obtain employment in their field by failing to adequately disclose the fact that certain programs lacked the necessary programmatic accreditation; and,
  • Deceived prospective students about the rate that graduates of CEC programs got a job in their field of study, thereby giving prospective students a distorted and inaccurate impression of CEC graduates’ employment outcomes. For instance, CEC inaccurately claimed that its graduates were “placed” who actually worked only temporarily or who were working in unrelated jobs.

The debt relief from the settlement will completely eliminate the existing balances held by CEC for those consumers in either one of the following categories:

  1. Students who attended American InterContinental University or Colorado Technical University AND completed their classes before December 31, 2013, OR
  2. Students who attended any CEC school that was closed prior to January 1, 2019, including Briarcliffe College, Brooks Institute, Collins College, Harrington College of Design, Katharine Gibbs School – Philadelphia, Le Cordon Bleu, Missouri College, and Sanford-Brown Colleges and Institutes.

CEC will notify eligible students of the debt relief by mail, and no further action from those consumers will be necessary. The settlement by CEC does not mean that any other loans held by other parties have been or will be forgiven. The federal government offers forgiveness of federal student loans under certain circumstances related to misrepresentations by schools. Former students with debt relief eligibility questions should contact CEC.

The settlement also requires CEC to significantly reform its recruiting and educating practices and to be monitored by an independent administrator for the next three years. Under the agreement, CEC will be required to disclose accurate and representative information to all prospective students, including information about the financial impact of enrolling for classes and the likelihood of placement in the desired field upon completing the course of study. The agreement also provides a 21-day risk-free trial period, providing consumers with an opportunity to evaluate the programs before being obligated to pay for the entire program.

In addition to the debt relief payments, CEC will also pay $5 million to the states to assist in funding current and future investigations into fraudulent practices of for-profit educators. Of that fund, $75,000 was allocated to Arizona to subsidize the cost of the investigation.

 

2 Comments

  1. When are they going to go after so-called non-profit higher ed institutions for charging a small fortune for indoctrinating students instead of imparting useful knowledge? I’m ashamed to say I received a degree from a university that became positively giddy about hosting a visiting scholar who claims to identify as a lesbian hippopotamus!?

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