A company that owns two national chains of for-profit colleges announced Thursday that it would wipe out the debt of nearly $ 500 million contracted by former students as part of a settlement with 48 States and the District of Columbia.
The agreement with Career Education Corporation will resolve allegations that she lied about placement rates and misled potential students into registering. State Attorneys General began investigating the company in 2014 as a result of student complaints and a damning US Senate report.
Company officials said on Thursday that they denied any wrongdoing, but called the settlement an "important milestone".
"We are confident that we can work with Attorneys General to demonstrate the quality of our institutions and our commitment to students," said Todd Nelson, the company's CEO, in a statement.
Headquartered in Schaumburg, Illinois, the company has approximately 34,000 students in two channels, Colorado Technical University and American InterContinental University. More than 90% of his students are enrolled via online courses, according to the company.
The agreement was signed by all states, with the exception of California, which is currently negotiating a separate agreement, and New York, which previously reached an agreement with the company.
Of the $ 493 million debt that has been cleared, the largest share comes from Florida borrowers, who will benefit from a $ 68 million tax break, followed by Texas with $ 51 million. The debt comes from institutional loans that the company has issued to students.
The other terms of the agreement require the company to pay $ 5 million to states to cover the cost of their investigations. The company will now be required to provide all potential students with a disclosure page containing information such as placement rates, expected costs and costs. average earnings of graduates.
State Attorneys General have described the agreement as a win for students, saying it would alleviate the debt of more than 179,000 borrowers nationwide. In Illinois, where $ 48 million will be released, Attorney General Lisa Madigan said it was a fair result for students deceived by the company's schools.
"The settlement reached today ensures that the company treats students as they should have been forever" with honesty and respect for their future, "Madigan said.
At its peak, Career Education Corporation ranked among the largest for-profit college businesses in the country, enrolling more than 100,000 students in several chains, including Sanford-Brown College and Cordon Bleu, a group of culinary schools. .
But after years of scrutiny by the government and sharp drops in listings, the company announced in 2015 that it would start closing or selling most of its schools.
In addition to government investigations, the company has also been under Federal Trade Commission investigation since 2015, according to the company's September filing with the US Securities and Exchange Commission. The FTC has examined the possibility of deception in advertising, according to the company, which states that it cooperates with the investigation.
The for-profit college industry has faced strong repression from President Barack Obama, but has seen his favor change under President Donald Trump. Over the past two years, Secretary of Education, Betsy DeVos, has sought to loosen regulations and reverse the policies created under the previous government.
However, the sector has been re-examined in recent weeks as a result of the brutal closure of the Education Corporation of America, which was one of the country's largest chains. before it collapsed in the midst of serious financial problems. Democrats cited the closure to prove that the industry needed closer monitoring.
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