NC students to benefit from $102 million multistate settlement with for-profit

Corinthian Colleges collapsed earlier this year after state law-enforcement officials and federal regulators accused the company of using inflated job placement and graduation rates to lure students into taking on debt to enroll. In addition, the company that runs the schools agreed to tell prospective students more about how much it will cost them and promised not to engage in deceptive recruiting practices. The almost 1,000 New Jersey students who will benefit from EDMC’s forgiveness of student loan debt were enrolled in online programs, although a few may have traveled to the Philadelphia and NY City campuses of the Art Institutes global, a subsidiary. (EDMC) agreed to pay $95.5 million in returned student loans and vowed to be more transparent in recruiting prospective students. The loan forgiveness will affect 80,000 students and provide an average of $1,370 to each student.

“Recruiters were pressuring students, supervisors were pressuring recruiters, managers were pressuring supervisors, all the way up the chain”, Litman said. Since federal student loan debt cannot be discharged in Chapter 7 bankruptcy, the long-term financial consequences can be devastating for these students.

The lawsuits contended that from 2003 to the present, EDMC falsely certified that it was complying with regulations in order to be eligible to receive the federal grant and loan dollars that compose the majority of the company’s revenue.

The company didn’t admit any wrongdoing as part of the settlement.

“This case not only highlights the abuses in EDMC’s recruitment system; it also highlights the courageous actions of EDMC employees who refused to go along with the institution’s deceptive practices”, U.S. Attorney General Loretta Lynch said at a news conference.

“Though we continue to believe the allegations in the cases were without merit, putting these matters behind us returns our focus to educating students”, said EDMC President and CEO Mark McEachen.

A former USA associate attorney general will independently monitor the company’s settlement compliance for three years and issue annual reports.

The settlement resolves a consumer fraud investigation brought by a coalition of attorneys general and separate whistleblower lawsuits.

The agreement requires EDMC to create an interactive online financial disclosure tool while barring any future misrepresentations to prospective students.

Within 90 days of the effective date of the agreement, EDMC must send a notice letter to each qualifying former student and each of the credit reporting agencies. The allegations in those cases involved, among other things, EDMC defrauding government entities by illegally paying incentive-based compensation to its admissions recruiters, taking into account the number of students that they recruited. The EFIP is in the final stages of development by the U.S. Consumer Financial Protection Bureau and state attorneys general.

Tennessee, along with 38 states and the District of Columbia, conducted a multistate investigation after receiving complaints from current and former EDMC students. In October, Apollo Education Group, the parent company of The University of Phoenix (UoP), was suspended from recruiting military student by the Department of Defense (DoD).

In September, the company resolved a shareholder lawsuit, agreeing to pay $2.5 million to investors who alleged EDMC misled investors when its stock plunged amid the ongoing suits.

Following the governments’ intervention, the parties litigated the case for several years, during which the relators and governments developed extensive additional evidence while defeating several efforts by EDMC to get it dismissed.