Agreement with Pennsylvania-based for-profit education company addresses consumer complaints and investigation by state attorneys general
Lincoln, NE - For-profit education company Education Management Corporation (EDMC) will significantly reform its recruiting and enrollment practices, and forgive more than $203,000 in loans for approximately 208 former students in Nebraska, through an agreement with Attorney General Doug Peterson and a group of state attorneys general.
EDMC, based in Pittsburgh, Pennsylvania, operates 110 schools in 32 states and Canada through four education systems, including Argosy University, The Art Institutes, Brown Mackie College and South University.
The agreement with attorneys general in 39 states plus the District of Columbia, through a consent judgment filed in Lancaster County District Court, mandates added disclosures to students, including a new interactive online financial disclosure tool; bars misrepresentations to prospective students; prohibits enrollment in unaccredited programs; and institutes an extended period when new students can withdraw with no financial obligation.
Nationwide, the agreement requires the for-profit college company to forgive $102.8 million in outstanding loan debt held by more than 80,000 former students.
Thomas Perrelli, former U.S. Associate Attorney General, will independently monitor the company’s settlement compliance for three years and issue annual reports.
Interactive Financial Disclosure Tool
The agreement will put in place a significant interactive online financial disclosure tool required for all prospective students who utilize federal student aid or loans. The impending online system, called the Electronic Financial Impact Platform (EFIP), is currently under the final stages of development by the U.S. Consumer Financial Protection Bureau (CFPB) and state attorneys general.
Based on a prospective student’s individual data, EFIP will produce a detailed financial report that includes the student’s projected financial commitment, living expenses and potential future earnings.
Consumer Complaints, Multistate Investigation
After receiving numerous complaints from current and former EDMC students, state attorneys general initiated a multistate investigation in January of last year. Attorneys and investigators reviewed consumer complaints, reviewed company documents, and interviewed former EDMC employees.
Under the agreement, EDMC must:
Those who will receive automatic relief related to outstanding EDMC institutional loans must have been enrolled in an EDMC program with fewer than 24 transfer credits; withdrew within 45 days of the first day of their first term; and their final day of attendance must have been between January 1, 2006 and December 31, 2014.
The agreement is expected to provide an average of $1,370 per person in loan forgiveness.