(Boise) – For-profit education company, Education Management Corporation, has agreed to reform its recruiting and enrollment practices and forgive loans to more than 500 former Idaho students in a settlement reached with Idaho Attorney General Lawrence Wasden and 38 other states.
EDMC, based in Pittsburgh, Pa., operates 110 schools in 32 states through four education systems, including Argosy University, The Art Institutes, Brown Mackie College and South University.
Under the settlement terms, Wasden said EDMC will forgive $504,000 in outstanding debt to 519 former students from Idaho.
The agreement also requires EDMC to make additional disclosures to students, including a new interactive online financial disclosure tool; bars misrepresentations to prospective students and prohibits enrollment in unaccredited programs.
“This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices,” Attorney General Wasden said. “EDMC’s practices were unfair to our state’s students and to our nation’s taxpayers who backed many of these federal student loans that were destined to fail.”
Nationwide, the agreement requires EDMC to forgive $102.8 million in loans held by more than 80,000 students. Compliance with the settlement will be monitored by Thomas Perrelli, a former U.S. Associate Attorney General. EDMC does not admit to the conduct alleged by the attorneys general.
The agreement requires EDMC to put in place an online financial disclosure tool for all prospective students who use federal student aid or loans. The impending system, called the Electronic Financial Impact Platform (EFIP), is currently in the final stages of development by the U.S. Consumer Financial Protection Bureau and state attorneys general.
By incorporating a prospective student’s individual data, the EFIP will produce a detailed financial report that includes the student’s projected financial commitment, living expenses and potential future earnings.
Under the agreement, EDMC also must:
- Not make misrepresentations about accreditation, selectivity, graduation rates, placement rates, financial aid, veterans’ benefits and licensure requirements. The company 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 completing the program, default rate for those enrolled in the same program, warning about the unlikelihood that credits from some EDMC schools will transfer to other institutions 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 to get a personalized snapshot of projected costs, estimated debt and post-graduation income.
- Reform its job placement rate calculations and disclosures to provide more accurate information about students’ chances 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 due to lack of accreditation, will not prepare graduates for jobs in their field.
- Permit incoming students at ground campuses to withdraw within seven days of the beginning of the term or first day of class without incurring any cost.
Those eligible for automatic relief related to their 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 term; and their 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.
“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 substantive changes to its business practices for future students,” Wasden said.
The agreement is subject to approval by the Fourth Judicial District Court in Ada County.
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