FOR-PROFIT EDUCATION COMPANY FORGOES COLLECTING LOANS AND CHANGES PRACTICES IN MULTI-STATE AGREEMENTPrint PDF
Monday, January 7, 2019
PIERRE, S.D. – Attorney General Jason Ravnsborg announced today that Career Education Corp. (CEC) has agreed to reform its recruiting and enrollment practices and forgo collecting more than $493.7 million in debts owed by 179,529 students nationally, in a settlement with state attorneys general.
The Assurance of Voluntary Compliance filed today caps a five-year investigation.
CEC agrees to forgo any and all efforts to collect amounts owed by former students living in the states participating in the agreement. In South Dakota, 1,011 students will get relief totaling $1,593,219.
Nationally, the average individual debt relief will be about $2,852.
CEC has also agreed to pay $5 million to the states. South Dakota’s share will be $50,000.
CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University.
CEC has closed or phased out many of its schools over the past 10 years. Its brands have included Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design & Technology, Le Cordon Bleu, Missouri College, and Sanford-Brown.
A group of attorneys general launched an investigation into CEC in January 2014 after receiving several complaints from students and a critical report on for-profit education by the U.S. Senate’s Health, Education, Labor and Pensions Committee.
The attorneys general alleged that CEC pressured its employees to enroll students and engaged in unfair and deceptive practices. These practices included making misleading statements or failing to disclose information to prospective students on total costs, transferability of credits, program offerings, job placement rates, and other topics.
As a result, some students could not obtain professional licensure and incurred debts that they could not repay nor discharge.
CEC denied the allegations of the attorneys general but agreed to resolve the claims through this multi-state settlement.
Under the agreement, CEC must:
- Make no misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, or licensure requirements.
- Not enroll students in programs that do not lead to state licensure when required for employment, or that due to their lack of accreditation, will not prepare graduates for jobs in their field. For certain programs that will prepare graduates for some but not all jobs, CEC will be required to disclose such to incoming students.
- Provide a single-page disclosure to each student that includes: a) anticipated total direct cost; b) median debt for completers; c) programmatic cohort default rate; d) program completion rate; c) notice concerning transferability of credits; d) median earnings for completers; and e) the job placement rate.
- Require students before enrolling to complete an Electronic Financial Impact Platform Disclosure, which provides specific information about debt burden and expected post-graduation income. CEC is working with the states to develop this platform.
- Not engage in deceptive or abusive recruiting practices and record online chats and telephone calls with prospective students. CEC shall analyze these recordings to ensure compliance. CEC shall not contact students who indicate that they no longer wish to be contacted.
- Require incoming undergraduate students with fewer than 24 credits to complete an orientation program before their first class that covers study skills, organization, literacy, financial skills, and computer competency. During the orientation period, students may withdraw at no cost.
- Establish a risk-free trial period. All undergraduates who enter an online CEC program with fewer than 24 online credits shall be permitted to withdraw within 21 days of the beginning of the term without incurring any cost. All undergraduates who enter an on-ground CEC program shall be permitted to withdraw within seven days of the first day of class without incurring any cost.
CEC has agreed to forgo collection of debts owed to the it by students who either attended a CEC institution that closed before Jan. 1, 2019, or whose final day of attendance at AIU or CTU occurred on or before Dec. 31, 2013.
Former students with debt relief eligibility questions can call CEC at 844-783-8629, or email them at CECquestions@careered.com.