State attorneys general from North Carolina and 38 other states plus the District of Columbia today announced a $102 million student loan forgiveness settlement with Pittsburgh-based for-profit school chain Education Management Corporation.
EDMC operates 110 schools in 32 states and Canada, including Argosy University, Brown Mackie College and South University, as well as The Art Institutes, which has campuses in Raleigh and Charlotte.
Today’s settlement wraps up a multistate investigation begun in 2014 after students complained that the company’s courses were more costly than they had been led to believe, did not transfer as they had been told they would, and did not lead to the high-earning jobs promised by recruiters.
Under the settlement, 2,881 North Carolinians will have $4.1 million in student debt forgiven, according to a statement released by Attorney General Roy Cooper. The loan forgiveness benefits students who enrolled at EDMC with only limited previous college experience and quickly dropped out without gaining anything from the school other than debt. 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.
The settlement also requires EDMC to change business practices. The company must give students accurate information about the total cost, average debt, default rate, job placement rate, average earnings, and ability to transfer credits associated with its programs.
“This settlement sets a new standard for for-profit colleges to give students clear, accurate disclosures about what they’ll pay, what they’ll owe, and how much they could earn,” Cooper said.
The company separately agreed today to pay $95 million to settle a federal whistleblower lawsuit under the False Claims Act. In that case, brought by the U.S. Department of Justice on behalf of the Department of Education, the government alleged that EDMC illegally paid its admissions recruiters based on the number of students they recruited.