BOSTON – Attorney General Maura Healey announced today that the for-profit education company Career Education Corp. (CEC) has agreed to stop collecting more than $11 million in debt from nearly 3,000 students in Massachusetts and will reform its practices following allegations of misleading prospective students and predatory enrollment tactics.
As part of a settlement filed by 49 state attorneys general, CEC will provide over $493.7 million in debt relief to more than 179,000 students nationally. An investigation into CEC was launched 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. The attorneys general alleged that CEC pressured its employees to enroll students, made misleading statements and failed to disclose information to prospective students on total costs, transferability of credits, program offerings, and job placement rates.
“Education programs must make proper disclosures to students so they can make informed decisions about their education,” AG Healey said. “This settlement will provide significant relief to students who didn’t get crucial information about the schools they were pressured to enrolled in.”
CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University. Its brands have included Le Cordon Bleu, Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design & Technology, Missouri College, and Sanford-Brown. Over the past 10 years, CEC has closed or phased out many of its schools.
As a result of today’s settlement, CEC has agreed to not make misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, or licensure requirements. They will also no longer enroll students in programs that do not lead to state licensure when required for employment, or that – due to their lack of accreditation – will not prepare graduates for jobs in their field. CEC must provide students with accurate disclosures about the total cost of their education, completion rates, expected debt burden post-graduation, and post-graduation employment outcomes.
Under the terms of the agreement, CEC will pay $5 million to the states, including $50,000 to Massachusetts. CEC has also agreed to independent monitoring and will record all online chats and phone calls with prospective students to ensure compliance.
Nationally, the average individual debt relief will be about $2,750 per student. Former students with debt relief eligibility questions can contact CEC at (847) 781-3600 or visit its website.
AG Healey’s Office has been at the forefront of efforts to secure relief for defrauded students. In July 2017, AG Healey led a multistate lawsuit against Secretary DeVos for abruptly rescinding the Borrower Defense Rule—a regulation that was designed to hold abusive higher education institutions accountable for cheating students and taxpayers. On October 16, a federal judge rejected a challenge to the Borrower Defense Rule, ordering its immediate implementation for students nationwide.
In December 2017, AG Healey sued Secretary DeVos for failing to provide federal loan discharges for students victimized by Corinthian Colleges and subjecting them to wage garnishment and tax refund interception. In June 2017, AG Healey joined 18 attorneys general in demanding that the Department stop delaying loan discharges for students victimized by predatory for-profit schools, including claims that have already been approved. And in October 2017, AG Healey sued to protect the Gainful Employment Rule, a federal regulation designed to protect students and taxpayers from predatory for-profit schools.
Addressing fraud and abuse in student lending has been a top priority for AG Healey since taking office, whether taking predatory schools to court, changing the practices of student loan servicers, going after unlawful student loan “debt relief” companies, or helping student borrowers find more affordable repayment solutions through her first-in-the-nation Student Loan Assistance Unit.
AG Healey’s Office also secured debt relief for students that went to the American Career Institute, reached settlements worth more than $6 million with Kaplan Career Institute, Lincoln Tech, Sullivan & Cogliano, and Salter College, filed a lawsuit against ITT Tech, and reached a settlement with an unlicensed for-profit nursing school.
Handling this case for Massachusetts are Assistant Attorneys General Tim Hoitink and Jennifer Snow of the AG’s Insurance and Financial Services Division.