The nation’s second-largest for-profit college is forgiving $103 million worth of student loan debt. Education Management Corporation has settled a lawsuit that claimed it violated consumer protection laws.
EDMC allegedly misled students about the benefits of a degree from its schools, and misrepresented job placement numbers.
In a separate action, the company agreed to pay an additional $95.5 million to settle four whistleblower lawsuits that claimed it misled the government about its recruiting strategy.
“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,” said Iowa Attorney General Tom Miller.
EDMC operates 110 schools throughout the United States and Canada. Among its properties are the Art Institutes, ARgosy University, Brown Mackie College, and South University.
Nearly 80,000 students who enrolled in those institutions are eligible for loan relief.
In the whistleblower lawsuit it was alleged that EDMC paid recruiters based on the number of students they enrolled. That practice is illegal for any school that accepts federal student loans and grants.
“Operating essentially as a recruitment mill, EDMC’s actions were not only a violation of federal law but also a violation of the trust placed in them by their students — including veterans and working parents — all at taxpayer expense,” said U.S. Attorney Loretta Lynch in a statement.
“Though we continue to believe the allegations in the cases were without merit, putting these matters behind us returns our focus to educating students,” said EDMC President and CEO Mark McEachen.
Based on the number of students eligible for a rebate, the average check returned to students will be approximately $1,370.
The lawsuit only includes former students who enrolled between 2006 and 2014 and withdrew within 45 days of their first term.
EDMC will send out notices to students who will be receiving a refund. Those with questions can call 1-855-725-4301 or visit the EDMC website.