Profit College Company to Pay $95.5 Million Over Recruitment

The Education Management Corporation, the nation’s second-largest for-profit chain, has agreed to pay a $95.5 million settlement in a case over its recruitment practices.

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. The Arizona AG’s Office said investigators reviewed allegations about false claims of accreditation, high-pressure student recruitment and misrepresented job-placement data.

“Higher education offers a host of benefits for people looking to improve their lives, but we allege that EDMC took advantage of, and caused harm to, many students through deceptive recruiting practices and exaggerated claims”, said Acting Attorney General Hoffman.

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

More than 80,000 students who attended for-profit schools in North Carolina and around the country will have more than $100 million in student loans forgiven thanks to a landmark settlement, Attorney General Roy Cooper announced Monday.

Permit incoming undergraduate students in on-line programs with fewer than 24 on-line credits to withdraw within 21 days of the beginning of the term without incurring any cost.

The global settlement with EDMC also resolves three additional federal FCA lawsuits in which the government did not intervene, all involving various violations of Title IV of the HEA by EDMC.

In addition to the relief described above, EDMC also agreed to work with Attorney General Brnovich to negotiate possible additional restitution related to Brown Mackie’s Nursing Program in Tucson. “This settlement should be a warning to other career colleges out there: We will not stand by while you profit illegally off of students and taxpayers”.

The whistleblower lawsuits alleged that EDMC paid its recruiters based on how many new students they enrolled, which is illegal for schools that accept federal student loans and grants.

Attorney General Loretta Lynch, right, accompanied by Education Secretary Arne Duncan, left, steps away from the podium following a news conference at the Justice Department in Washington on Monday, November 16, 2015.

“They shut the blinds, rerouted attendees so they would not see us, tried to kick us off of public property, although numerous workers at the school came out and looked or laughed at us none of them were willing to try to come up and try talking with us”, said Fabares, who went to several of the sites. Under the settlement, students who enrolled in an EDMC program with fewer than 24 transfer credits and dropped out within 45 days between January 1, 2006 and December 31, 2014 will have private loans issued by the school forgiven. “There are provisions for forgiveness of loans in this agreement with EDMC…$102.8 million in loans owed to EDMC”.

The Justice Department said Education Management Corporation (EDMC) used deceptive practices to sign up students when it knew the odds of them finishing its programs or getting jobs after them were low.

The settlement agreement, which includes no admission of wrongdoing, obligates EDMC to make payments over time totaling $95.5 million.

Education Management, based in Pittsburgh, Pa., is the latest for-profit education company to have problems with the federal government. Corinthian Colleges closed its doors and filed for bankruptcy earlier this year after facing state and federal probes about whether it misled investors and students.