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Attorney General Mike DeWine
$10.6 Million
in Ohio Student Loans to be Forgiven in Settlement
(COLUMBUS, Ohio)—Ohio 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.
Under 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.
“We 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.”
In 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.
The 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.
Disclosures:
EDMC 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.
EDMC must reform its job placement rate calculations
to provide more accurate information about students’ likelihood of
obtaining employment in their chosen field.
Prospective 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.
Prohibited misrepresentations:
EDMC must not make misleading statements about
accreditation, selectivity, graduation rates, placement rates,
transferability of credit, financial aid, veterans’ benefits, or
licensure requirements.
EDMC is prohibited from knowingly enrolling students
in programs not accredited by the state if such accreditation is
typically required for employment.
Recruiting practices:
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:
EDMC must require incoming undergraduate students
with fewer than 24 credits to complete an orientation program prior to
their first class.
Undergraduate 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.
Undergraduate 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:
EDMC 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.
EDMC 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.
EDMC’s 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.
Participating 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.
In 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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