Some Virginia Beach college students will see an average loan forgiveness of a little more than $1,000 as part of a settlement between a for-profit education company and state and federal officials following claims of illegal recruiting, consumer fraud and other violations.
Education Management Corporation will forgive $2.29 million in loans for approximately 2,000 former students in Virginia and $102.8 million of debt to 80,000 former students nationwide, according to a release from Virginia Attorney General Mark Herring. The settlement follows a massive investigation into the company that spanned 39 states and parts of Canada.
“EDMC’s practices were unfair to Virginia students and to taxpayers who backed many of the federal student loans that were destined to fail,” Herring said in the release.
The company also agreed to pay a $95 million in settlement with the U.S. Department of Justice.
The DOJ’s investigation began in January 2014, after numerous complaints from former students. Attorneys and investigators reviewed consumer complaints, reviewed company documents, and interviewed former EDMC employees.
“Our investigation produced a pretty clear picture of how EDMC recruited prospective students into its programs and how many of those students left the program with tremendous debt and unfulfilled promises,” Herring said in the statement, adding the settlement addresses those concerns.
EDMC, based in Pittsburgh, operates 110 schools in 32 states and Canada through four education systems, including Argosy University, The Art Institutes, Brown Mackie College and South University and has campuses in Virginia Beach, Richmond and Arlington, according to the release.
Herring’s office did not have a more detailed numbers showing how many of the Virginia students that are covered in the settlement attended EDMC campuses in Virginia Beach.
Under the agreement, EDMC must:
- Not make misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, and licensure requirements. EDMC shall not engage in deceptive or abusive recruiting practices and shall record online chats and telephone calls with prospective students.
- Provide a single-page disclosure to each prospective student that includes the student’s anticipated total cost, median debt for those who complete the program, the default rate for those enrolled in the same program, warning about the unlikelihood that credits from some EDMC schools will transfer to other institutions, the median earnings for those who complete the program, and the job placement rate.
- Require every prospective student utilizing federal student loans or financial aid to submit information to the interactive Electronic Financial Impact Platform (EFIP) in order to obtain a personalized picture of the student’s projected education program costs, estimated debt burden and expected post-graduate income.
- Reform its job placement rate calculations and disclosures to provide more accurate information about students’ likelihood of obtaining sustainable employment in their chosen career.
- Not enroll students in programs that do not lead to state licensure when required for employment or that, due to lack of accreditation, will not prepare graduates for jobs in their field.
- Require incoming undergraduate students with fewer than 24 credits to complete an orientation program prior to their first class.
- Permit incoming undergraduate students at ground campuses to withdraw within seven days of the beginning of the term or first day of class (whichever is later) without incurring any cost.
- Permit incoming undergraduate students in online programs with fewer than 24 online credits to withdraw within 21 days of the beginning of the term without incurring any cost.
- Require that its lead vendors, which are companies that place website or pop-up ads urging consumers to consider new educational or career opportunities, agree to certain compliance standards. Lead vendors shall be prohibited from making misrepresentations about federal financing, including describing loans as grants or “free money;” sharing student information without their consent; or implying that educational opportunities are, in fact, employment opportunities.