For-Profit Colleges Forced to Forgive $100M in Student Loans
In a case of a headline being ripped straight from an episode of The Good Wife, a company that manages for-profit colleges has agreed to forgive over $102.8 million in student loan debt. Education Management Corporation (EDMC) reached a settlement with 39 state attorneys general to rescind debt owed by more than 80,000 former students nationwide.
EDMC was accused of using "high-pressure" recruitment tactics, giving inaccurate information about some of their programs' accreditation, and misrepresenting its colleges' educational benefits, job placement rates, and graduation rates. The company will pay $95 million to the federal government, who backed the loans.
EDMC Not a Good Equation
According to Attorney General Loretta Lynch, the company was "Operating essentially as a recruitment mill," saying "EDMC's actions were not only a violation of federal law but also a violation of the trust placed in them by their students." EDMC wasn't treating their employees much better. The Department of Justice said EDMC violated the Higher Education Act by paying admissions personnel purely on the number of students they enrolled.
While EDMC won't have to admit to any of the conduct alleged by attorneys general, from now on its schools will need to add certain disclosures, remove unaccredited programs, and give students a longer period of time to withdraw without financial obligation. Many students complained that they would've withdrawn from the schools as soon as they realized they were receiving substandard education, but remained due to their student loan obligations.
The Art Institute of the Steal
Perhaps the most well-known schools in EDMC's portfolio are The Art Institutes. Art Institute graduates have been quite vocal in their requests for loan forgiveness, and EDMC announced in May that it would shut down 15 of its 52 campuses nationwide.
If you think your school pressured you into enrollment, lied about the value of the education, or if you're otherwise having trouble repaying your student loans, you may want to consult with an experienced bankruptcy attorney near you.
- Browse Bankruptcy Lawyers by Location (FindLaw Directory)
- Your Options When You Can't Repay Student Loans (FindLaw)
- Borrowed Till You're Blue? Student Debt and Marriage (FindLaw's Law and Daily Life)
- Defaulting on a Student Loan Can Cost You Your Law License (FindLaw's Greedy Associates)