via Moak: Mississippi student loan forgiveness, clarionledger.com, 12/3/2015
PDF: EDMC Student Loans
There’s a lot of money to be made in the business of for-profit education. This fast-growing industry has found the increasing demand for college degrees can be lucrative, garnering billions from students looking to enhance their resumes in an increasingly-competitive environment. Many of those students receive financial assistance, including federal student loans. But with the rapid growth of the industry have come increasing concerns about some for-profit institutions. Regulators have cited concerns about recruitment practices, sketchy quality and lack of accountability, among other issues.
In mid-November, a company named Education Management Corp. (EDMC) reached an agreement with 40 attorneys general to significantly reform its recruiting and enrollment practices and forgive more than $102 million in student loan debt from about 80,000 students nationwide. That amount will include $1,229,321 in loan forgiveness for about 1,358 Mississippi former students, Mississippi Attorney General Jim Hood revealed in a recent news release.
Pennsylvania-based EDMC 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 will require EDMC to significantly revise its recruiting and enrollment practices. It 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. EDMC also settled a $95 million civil suit brought by the U.S. Department of Justice. (It should be noted that EDMC did not agree with the findings of the extensive investigations.)
“This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices,” Hood noted. “EDMC’s practices were unfair to our state’s students, and they were also unfair to our nation’s taxpayers who backed many of these federal student loans that were destined to fail. This is a rigorous agreement that not only provides some relief to a large number of former students through loan forgiveness, but helps ensure that the company will make substantial changes to its business practices for future students.”
“This case not only highlights the abuses in EDMC’s recruitment system; it also highlights the brave actions of EDMC employees who refused to go along with the institution’s deceptive practices,” U.S. Attorney General Loretta Lynch said at a news conference announcing the settlement of the federal “whistleblower” lawsuit. That investigation stems from 2007, when a recruiter and the EDMC employee who trained her came forward with allegations the school recruited students who were unlikely to succeed, using recruiters who were promised illegal enrollment-based incentives.
The state investigations, begun in January 2014, followed numerous complaints from current and former EDMC students, and provided a window into a disturbing pattern of alleged behavior.
“Our investigation gave us a pretty clear picture of how EDMC lured prospective students into its programs, and how many students left the program with unfulfilled promises and oftentimes tremendous debt,” Hood said. “We think this agreement addresses our biggest concerns about the company’s business practices and puts in place new transparency and accountability.”
Under the agreement, EDMC must abide by a number of provisions, including:
- 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 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.
To be eligible for loan relief, you must have been enrolled in an EDMC program with fewer than 24 transfer credits; have withdrawn within 45 days of the first day of your first term; and your final day of attendance must have been between Jan. 1, 2006, and Dec. 31, 2014.
The agreement is expected to provide an average of $1,370 per person in loan forgiveness.