The Illinois-based corporation agreed to pay $493.6 million to nearly 175,000 students nationwide, after an investigation by the Washington State Attorney General and 47 other states found it used deceptive and misleading practices to attract students.
Washington students who attended for-profit Career Education Corporations’ now-closed colleges in Tukwila or took online classes through the company will receive a total of $7.6 million in student-debt relief, the state attorney general announced Thursday.
The relief is a part of the Illinois-based corporation’s agreement to pay $493.6 million to nearly 175,000 students nationwide, after an investigation by the Washington State Attorney General and 47 other states found it used deceptive and misleading practices to attract students.
The agreement comes amid increased scrutiny on U.S. Secretary of Education Betsy DeVos for her handling of student debt and for-profit college’s predatory practices. Washington State Attorney General Bob Ferguson has sued DeVos’s Department of Education twice over student-loan protections. In one case, a federal judge sided with Ferguson and 18 other state attorneys general in their suit against the department for delaying the implementation of an Obama-era borrower defense rule. The other case is ongoing.
Under the agreement, up to 3,146 Washingtonians will be paid a median of $1,463, although some will receive up to $59,000, said Shannon Smith, chief of Washington’s consumer-protection division. Students will also have the debt removed from their credit reports. Under the agreement, the company must notify all eligible students within 60 days.
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In Washington, the company operated a Sanford-Brown campus — previously known as the International Academy of Design and Technology — and a Le Cordon Bleu. Both were in Tukwila. The schools stopped enrolling new students in 2015 and closed, although some Washington students may have continued attending Career Education Corporation schools online.
Washington students who attended one of the schools that closed before Jan. 2, 2019, will receive debt relief. Those whose last day at the company’s two remaining schools, American InterContinental University and Colorado Technical University, was before 2014 will also receive relief. The company had addressed most of its misleading practices at those two institutions by then, according to the Attorney General’s Office.
The company misled students about the total cost of attendance, didn’t disclose that some programs were not accredited and shared misleading job-placement rates, the attorney general found. The company counted graduates who worked temporarily or in a field unrelated to their studies as graduates successfully placed in jobs. Several students filed consumer complaints with the Washington State Attorney General’s Office stating that the school told them credits would easily transfer to other schools — but the office found that was not the case.
In addition to debt relief, the company must give prospective students accurate information about cost, graduation rates, job-placement rates and debt. It will also have to provide a risk-free trial period for students who have less than 24 credit hours when they enter the program.
The company denied allegations of wrongdoing as part of the agreement, it said in a statement on its website. It has agreed to work with a third-party administrator who will oversee the company’s adherence of the terms of the agreement for three years.
“We can work with the attorneys general to demonstrate the quality of our institutions and our commitment to students,” Chief Executive Officer Todd Nelson said in the statement.
The company has not yet finalized agreements with the attorneys general of California or New York.