For-profit schools will give up collecting millions of student debt in settlement


Hundreds of Iowa students will receive more than $ 1.4 million in debt relief as part of a nationwide settlement with a for-profit education company, announced Thursday the Iowa Attorney General Tom Miller.

Miller and 48 other attorneys general struck a deal with Career Education Corp., which operates for-profit colleges across the country. As part of the deal, the company will forgo collecting $ 493.7 million owed by 179,529 students across the country.

Iowan’s share of the debt relief is $ 1,424,662 for 715 students, Miller said at a press conference Thursday.

“The deal is largely driven by debt cancellation, and that’s really important to the students,” Miller said.

Nationally, student debt relief will average about $ 2,750.

The CEC is based in Illinois and operates several for-profit schools, including American InterContinental University and Colorado Technical University. The company has closed or removed many of its schools over the past decade. Miller said he didn’t believe any of his schools had a physical campus in Iowa.

Students are eligible for debt relief if they attended a CEC school that closed before January 1, 2019, or if their last day of attendance at IAU or CTU was on or before December 31. 2013.

Miller said the settlement agreement also requires schools operated by the CEC to change several of their practices to better educate students about costs, debt and default rates, graduation and completion rates. , credit transfer, median income and placement rates. A five-year survey found that schools routinely misled students about the cost of attendance and future career prospects.

Schools should also avoid deceptive or abusive recruiting methods, including the use of emotionally charged language to pressure students to enroll.

A lawyer will monitor the company’s compliance with the settlement agreement for three years.

The CEC will also pay $ 5 million to the states involved in the agreement, including $ 257,000 to Iowa.

The Iowa and Connecticut attorneys general offices have taken the lead, Miller said.

Miller said he and other state attorneys general had been investigating for-profit colleges and universities for years and had already reached settlement deals with various for-profit institutions.

“For a variety of reasons, enormous deception and fraud has developed in for-profit colleges over the past decade and it really peaked in 2010,” he said.

With President Donald Trump’s administration rescinding some rules put in place by former President Barack Obama, Miller said, it will be up to attorneys general on both sides to investigate bad behavior.

“We plan to be very vigilant against bad practices because we do not have the partner in Washington that we had,” he said.

The only two states not to join Thursday’s deal are New York and California. Miller said New York is covered by a separate agreement with the company and California may join the agreement at a later date.

Last week Miller announced a multi-state deal with Wells Fargo. The bank agreed to pay $ 575 million to resolve allegations it engaged in deceptive practices, including creating millions of unauthorized accounts receivable.

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