January 4, 2019

CT in $500M settlement with for-profit education company

File Photo
File Photo
Outgoing state Attorney General George P. Jepsen.

For-profit education company Career Education Corp. (CEC) has agreed to reform its recruiting and enrollment practices and will forgo collecting approximately $493.7 million in debts owed by 179,529 students nationally through a settlement with 49 attorneys general, state Attorney General George Jepsen announced Thursday.

Connecticut was one of seven states that led a five-year multistate investigation into the company, which was launched following accusations of predatory and deceptive practices and a critical report on for-profit education by the U.S. Senate's Health, Education, Labor and Pensions Committee.

"For far too long, unscrupulous for-profit colleges have put money before people, engaged in deceptive recruiting practices, and left students with a burden of crushing debt while providing them with useless degrees that wouldn't lead them to gainful employment," said Jepsen in a statement.

"It is my hope that this debt relief will help to ease the burden on students who were trying to better themselves, their careers and their livelihoods but were instead tricked into programs and degrees that were sometimes worthless," Jepsen added.

Headquartered in Schaumburg, Ill., CEC offers primarily online courses through American InterContinental University and Colorado Technical University. The company has shuttered or phased out many of its other schools over the past decade.

The states' investigation found that CEC used emotionally charged language to pressure students into enrolling in CEC schools and deceived students about the total costs of enrollment. Admissions representatives were instructed to inform prospective students only about the cost per credit hour without disclosing the total number of required credit hours.

The states alleged that CEC misled students about the transferability of credits and misrepresented the potential for students to obtain employment by failing to disclose that certain programs lacked necessary accreditation and by distorting graduation and job placement rates.

Under the agreement, CEC has agreed to forgo efforts to collect amounts owed by former students living in Connecticut and other participating states (Iowa, Illinois, Kentucky, Maryland, Oregon and Pennsylvania).

Nationally, the average individual debt relief will be about $2,750. Approximately 1,415 former students living in Connecticut will receive debt relief through this settlement.

Contact Michael Bingham at mbingham@newhavenbiz.com

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