3,600 Students To Get Loan Debt Relief After AG Settlement

DENVER, CO – It'll be a happy New Year for 3,600 Colorado students saddled with student loans after enrolling in for-profit online classes with American InterContinental University and Colorado Technical University.

As part of a nationwide settlement with Attorney Generals from 49 states, $7.2 million in student loans will be forgiven for Colorado students who attended for-profit institutions run by Schaumburg, Illinois-based Career Education Corporation (CEC). The settlement in Colorado averages $2,000 of debt relief per student.

Attorney General Cynthia Coffman announced that the state of Colorado would also receive $50,000 as part of a $5 million damages settlement from the company for allegedly "deceptive and predatory admissions practices," the AG's office said in a statement.

All told, CEC will pay out $493.7 million in debt relief for 179,529 students across the U.S.

“Prospective students have a right to know the truth about their chances for future employment. Deceptive and predatory admissions practices will not be tolerated” Coffman said in a press release.

CEC denied the allegations of the attorneys general but agreed to resolve the claims through the multistate settlement.

CEC has closed or phased out many of its schools over the past 10 years, the AG's office said. Its brands have included Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design & Technology, Le Cordon Bleu, Missouri College, and Sanford-Brown.

A group of attorneys general launched an investigation into CEC 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 AG's office said.

According to the AG's office, the following deceptive practices were uncovered:

• CEC used emotionally charged language to pressure them into enrolling in CEC’s schools;
• CEC deceived students about the total costs of enrollment by instructing its admissions representatives to inform prospective students only about the cost per credit hour without disclosing the total number of required credit hours;
• CEC misled students about the transferability of credits into CEC from other institutions and out of CEC to other institutions by promising on some occasions that credits would transfer;
• CEC misrepresented the potential for students to get jobs in the field by failing to adequately disclose that certain programs were not accredited.
• CEC deceived prospective students about the rate that graduates of CEC programs got a job in their field of study, thereby giving prospective students a distorted and inaccurate impression of CEC graduates’ employment outcomes. For instance, CEC inaccurately claimed that its graduates were “placed” who worked only temporarily or who were working in unrelated jobs.

Students who enrolled in CEC colleges allegedly could not obtain professional licensure, and were "saddled with substantial debts that they could not repay nor discharge," the AG's office said.

According to the agreement, going forward CEC must:

• Make no misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, or licensure requirements.
• Not 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. For certain programs that will prepare graduates for some but not all jobs, CEC will be required to disclose such to incoming students.
• Provide a single-page disclosure to each student that includes: a) anticipated total direct cost; b) median debt for completers; c) programmatic cohort default rate; d) program completion rate; c) notice concerning transferability of credits; d) median earnings for completers; and e) the job placement rate.
• Require students before enrolling to complete an Electronic Financial Impact Platform Disclosure, which provides specific information about debt burden and expected post-graduation income. CEC is working with the states to develop this platform.
• Not engage in deceptive or abusive recruiting practices and record online chats and telephone calls with prospective students. CEC shall analyze these recordings to ensure compliance. CEC shall not contact students who indicate that they no longer wish to be contacted.
• Require incoming undergraduate students with fewer than 24 credits to complete an orientation program before their first class that covers study skills, organization, literacy, financial skills, and computer competency. During the orientation period, students may withdraw at no cost.
• Establish a risk-free trial period. All undergraduates who enter an online CEC program with fewer than 24 online credits shall be permitted to withdraw within 21 days of the beginning of the term without incurring any cost. All undergraduates who enter an on-ground CEC program shall be permitted to withdraw within seven days of the first day of class without incurring any cost.

More students may be eligible, the AG's office said.

"CEC has agreed to forgo collection of debts owed to it by students who either attended a CEC institution that closed before Jan. 1, 2019, or whose final day of attendance at AIU or CTU occurred on or before Dec. 31, 2013," the AG's office said. Former students with debt relief eligibility questions can contact CEC.

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