ATTORNEY GENERAL MADIGAN REACHES $493.7 MILLION SETTLEMENT WITH FOR-PROFIT EDUCATION COMPANY
Career Education Corporation to Forgo Collecting Loans, Will Change Practices in Agreement with Madigan & 48 AGs
Chicago — Attorney General Lisa Madigan today announced for-profit education company Career Education Corp. (CEC) has agreed to reform its recruiting and enrollment practices and forgo collecting about $493.7 million in debts owed by 179,529 students nationally, in a settlement with her and 48 other attorneys general.
“CEC students in Illinois and across the country deserve this relief after the deception they endured as a result of CEC’s fraudulent actions,” Madigan said. “Today’s settlement ensures the company treats students the way they should have been all along – with honesty and respect for their futures.”
As part of the agreement, CEC agrees to forgo any and all efforts to collect amounts owed by former students living in the states participating in the agreement. In Illinois, 16,852 students will get relief totaling over $48 million, which is an average payment of about $2,850 per student. In addition, CEC has agreed to pay $5 million to the states, including over $250,000 to Illinois. Finally, a package of injunctive provisions will protect prospective Illinois students moving forward.
CEC is based in Schaumburg, Ill., and currently offers primarily online courses through American InterContinental University and Colorado Technical University. CEC has closed or phased out many of its schools over the past 10 years. 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.
The agreement with CEC caps a seven-year investigation by Madigan that was spurred by student complaints and a critical report on for-profit education by the U.S. Senate’s Health, Education, Labor and Pensions Committee. A group of other attorneys general joined her in January 2014. That investigation revealed evidence demonstrating that:
As a result of the unfair and deceptive practices described above, students enrolled in CEC who would not have otherwise enrolled, could not obtain professional licensure, and were saddled with substantial debts that they could not repay nor discharge. CEC denied the allegations of Madigan and the other attorneys general but agreed to resolve the claims through this multistate settlement.
Highlights of the agreement
Robert McKenna, former Washington state attorney general and current partner at the San Francisco-based law firm of Orrick, Herrington & Sutcliffe, will independently monitor the company’s settlement compliance for three years and issue annual reports.
Former students with debt relief eligibility questions can contact CEC.
The CEC investigation was led by Madigan and the attorneys general of Iowa, Connecticut, Kentucky, Maryland, Oregon and Pennsylvania. The agreement also covers the District of Columbia and the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
Madigan is a national leader in investigating and enforcing consumer protection violations in the higher education field. The Illinois Student Loan Bill of Rights drafted by Madigan's office took effect Monday, Dec. 31, 2018. It addresses widespread abuses and failures in the student loan industry revealed by thousands of student borrower complaints to Madigan’s office and verified by Madigan’s investigation into Navient, one of the country’s largest student loan servicing companies. The Student Loan Bill of Rights addresses these problems by requiring student loan servicers to properly process payments; by requiring specialists to provide and explain to struggling borrowers all of their repayment options, starting with income-driven plans; and through the creation of a Student Loan Ombudsman in Madigan’s office.
Madigan also operates a free Student Loan Helpline to provide student borrowers with resources about repayment options, avoiding default or how to file a complaint about loan servicing at (800) 455-2456 (TTY: 1-800-964-3013).