Tuesday, November 17, 2015
Courts - "For-Profit College Operator EDMC Will Forgive Student Loans"
That is the headline to a NY Times story by Stephanie Saul on a nation-wdie settlement that includes Indiana. Some quotes:
The for-profit college operator Education Management Corporation will forgive loans to about 80,000 former students nationwide as part of an agreement with state attorneys general resulting from a multiyear investigation of the company’s aggressive recruitment practices.In Indiana,5,530 are eligible to $5,729,910 in loan forgiveness.
The $102.8 million loan forgiveness program was announced on Monday in Washington along with a separate $95.5 million civil settlement with the Department of Justice, the result of a whistle-blower lawsuit accusing the company of using boiler-room tactics to enroll students who had little chance of succeeding in college.
“EDMC wasn’t interested in playing by the rules,” said Education Secretary Arne Duncan in announcing the federal settlement. “The company seemed to care only about revenue at significant cost to students and taxpayers.”Under the settlement with the states, students nationwide who were enrolled for 45 days or fewer and who had transferred fewer than 24 credit hours from another university will see their private loans automatically forgiven by the company, said Nathan Blake, an assistant attorney general in Iowa, one of the lead states involved in negotiations with the company. The average student eligible for the program will receive about $1,370 in loan forgiveness. * * *
In a news release, Education Management said it would soon notify students whose loans have been forgiven. * * *
The federal government will share proceeds of the settlement with the whistle-blowers and the states that participated in the case.
The Massachusetts attorney general, Maura Healey, said her state’s $75,000 share of the settlement would be used to assist students there who took out state loans to go to the New England Institute of Art, an Education Management school. Ms. Healey urged the federal government to use its $52.62 million share of the settlement to pay down federal loans taken out by the Education Management students.
Indiana Attorney General Zoeller issued a long news release yesterday headed "Parent company of Brown Mackie College and The Art Institutes settles federal whistleblower suit and multistate suit."
As for what will happen to Indiana's share of the settlement, it looks like, per the Zoeller news release, that amount will go directly to the state General Fund:
EDMC will pay Indiana, four other states and the federal government a combined $95.5 million over a period of years to settle whistleblower lawsuits alleging EDMC illegally paid incentives-based compensation to its admissions recruiters, tied to the number of students they recruited. Indiana will receive a net $1.2 million to reimburse the public treasury for costs associated with EDMC’s fraudulent practices.Some readers may recall a Feb. 20, 2015 ILB post headed "When States Win Lawsuits, Where Does the Money Go?" And this earlier post, from Feb. 4, 2015, headed "What will become of Indiana's $21.5 million share of the S&P settlement?"