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Press Release

Attorney General Shapiro Announces For-Profit College Company Will Provide $493 Million in Debt Relief for Over 179,000 Students Nationwide

January 3, 2019 | Topic: Consumers

12,600 Pennsylvania Students Will Have $38.6 Million in Education Debt Relieved

HARRISBURG — Attorney General Josh Shapiro today announced that for-profit education company Career Education Corporation will release $493.7 million in debts owed by 179,529 students nationally in a settlement with 49 Attorneys General. The company will also reform its recruiting and enrollment practices.

In Pennsylvania, the settlement means 12,600 Pennsylvania students who attended a school affiliated with CEC will have $38.6 Million in student loan debts relieved. CEC operated three now-closed schools in Pennsylvania – one location each in Philadelphia, Pittsburgh and Wilkins, just outside Pittsburgh. The schools operated under the name Sanford-Brown College.

“The settlement I’m announcing today ensures that thousands of Pennsylvanians who were misled and deceived by the false promises of this for-profit corporation will see their loan debt eliminated,” Attorney General Shapiro said. “Students who pay tuition to attend these or any other college deserve a fair deal and an honest representation to them of what they’re paying for. This corporation and its colleges failed to do that – and we’re holding them accountable.”

A group of attorneys general, including Pennsylvania, 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. That investigation revealed evidence demonstrating that:

  • CEC used emotionally charged-language to pressure students into enrolling in CEC’s schools
  • CEC representatives deceived students about the total costs of enrollment by telling prospective students only about the cost per credit hour — without disclosing the total number of required credit hours
  • CEC misled students about the transferability of credits into CEC from other institutions and out of CEC to other institutions
  • CEC misrepresented the potential for students to obtain employment in their field by failing to adequately disclose that some programs lacked necessary programmatic accreditation, and
  • CEC deceived prospective students about the rate that graduates of CEC programs got a job in their field of study.

As a result of these unfair, deceptive practices, students enrolled in CEC who would not have otherwise enrolled, could not obtain professional licensure, and were saddled with substantial debts that they could not repay nor discharge.

In addition to the large amount of student loan debt relief agreed to by CEC, the company has also agreed to pay an additional $5 Million to the states participating in the investigation.  Pennsylvania’s share of that part of the settlement is $264,285.

CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University.  The company has closed or phased out many of its schools over the past 10 years, including Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design & Technology, Le Cordon Bleu, Missouri College, and Sanford-Brown.

CEC denied the allegations of the attorneys general but agreed to resolve the claims through this multistate settlement. Robert McKenna, former Washington state attorney general, will independently monitor the company’s settlement compliance for three years and issue annual reports.

Debt relief

CEC has agreed to forgo collection of debts owed to the corporation 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 contact CEC. Any Pennsylvania students seeking help can contact the Attorney General’s Bureau of Consumer Protection at 800-441-2555.

Other reforms

Under the settlement agreement, CEC must:

  • Make no misrepresentations concerning accreditation, selectivity, graduation or placement rates, transferability of credit, veterans’ benefits, or licensure requirements.
  • Not enroll students in programs that do not lead to state licensure when required for employment, or due to their lack of accreditation, will not prepare graduates for jobs.
  • Provide a single-page disclosure to each student that includes: a) anticipated total direct cost; b) median debt and earnings for completers; c) programs’ default and completion rates; c) notice concerning transferability of credits; and e) job placement rates.
  • Require students before enrolling to complete an Electronic Financial Impact Platform Disclosure. CEC is working with the states to develop this platform.
  • Not engage in deceptive recruiting practices and record online chats and telephone calls with prospective students. CEC shall analyze these recordings to ensure compliance.
  • Require incoming undergraduate students with fewer than 24 credits to complete an orientation program that covers study skills, organization, literacy, financial skills, and computer competency.
  • 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 cost. All undergraduates who enter an on-ground CEC program shall be permitted to withdraw within seven days of the first day of class.

The CEC investigation was led by Pennsylvania, Iowa, Connecticut, Illinois, Kentucky, Maryland, and Oregon.  The agreement also covers the District of Columbia and Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

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