Beshear: For-Profit College Settlement to Eliminate $2.3 Million in Debt for more than 1,300 Kentuckians

Beshear has secured $4 million in debt relief, $3 million to General Fund in last week

FRANKFORT, KY. (Jan. 7, 2019) – Attorney General Andy Beshear today announced that for-profit education company Career Education Corp. or CEC has agreed to reform its recruiting and enrollment practices and forgo collecting more than $2.3 million in debts owed by more than 1,300 Kentucky students.

The announcement is part of a $498 million national settlement with the Illinois-based CEC and state attorneys general that caps a five-year investigation launched after numerous student complaints and a critical report by federal lawmakers.

“As Attorney General, I am committed to protecting Kentucky families,” Beshear said. “This settlement holds CEC accountable for its past abusive practices, and it provides relief to hundreds of Kentuckians, many who attended schools of questionable quality and incurred debts that they could not repay nor discharge.”

Last week, Beshear reached a $1.7 settlement with Sullivan University for nearly 700 former Spencerian College students. CEC and Spencerian settlements combined total $4 million in debt relief for more than 2,000 students.

CEC does not have brick and mortar locations in Kentucky, and has closed or phased out many of its schools nationwide over the past 10 years. It currently offers only online courses through American InterContinental University and Colorado Technical University.

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. 

CEC has agreed to forgo collection of debts owed by students who either attended a CEC institution that closed before Jan. 1, 2019, or whose final day of attendance at American InterContinental University or Colorado Technical University occurred on or before Dec. 31, 2013.

Over the next two months, impacted students will receive a letter from CEC notifying them of the debt cancellation and that the credit reporting agencies are being notified to remove any adverse credit information. Former students with debt relief eligibility questions may contact CEC using its contact info page.

As part of the settlement, Beshear and the group of AGs alleged that CEC pressured its employees to enroll students and engaged in unfair and deceptive practices.

These practices included making misleading statements or failing to disclose information to prospective students on total costs, transferability of credits, program offerings and job placement rates, Beshear said.

CEC denied the allegations of the attorneys general but agreed to resolve the claims through this multistate settlement.

Robert McKenna, former Washington state Attorney General, will independently monitor the company’s settlement compliance for three years and issue annual reports.

In reforming recruiting and enrollment practices, CEC must make no misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits or licensure requirements.

The company cannot enroll students in programs that do not lead to state licensure when required for employment, and it must provide a single-page disclosure to each student that includes information such as anticipated total direct cost and median debt.

The company cannot engage in deceptive or abusive recruiting practices and must record online chats and telephone calls with prospective students for analysis by the compliance monitor. Incoming undergraduate students with fewer than 24 credits must receive an orientation program before their first class.

CEC agreed to pay the states as part of its settlement. Kentucky will receive nearly $200,000 that will go to the state’s General Fund for lawmakers to appropriate during the 2020 legislative budget session, Beshear said.

Last week, Beshear secured $2.8 million for Kentucky’s General Fund from a settlement with banking giant Wells Fargo over alleged unfair and deceptive trade practices.

Beshear’s office is committed to holding for-profit colleges accountable in Kentucky and is working to help defrauded students.

Last year, the Office of Attorney General won its case against American National University, (formerly known as National College) in Fayette Circuit Court alleging that National College violated the Kentucky Consumer Protection Act by advertising false and misleading employment rates for its graduates.

In 2017, Beshear secured federal debt relief for approximately 2,000 Kentuckians, many of them veterans, who were victimized by predatory practices by Corinthian Colleges Inc.

In 2016, Beshear announced nearly 3,500 former students of Daymar College’s Kentucky campuses and online programs would receive restitution checks totaling $1.2 million. The payments were pursuant to a settlement agreement the Office of the Attorney General entered into with Daymar in 2015 resolving a consumer protection lawsuit.

Students who believe a private college has misled them or who have been a victim of fraudulent debt relief services can contact Beshear’s office by phone, 502-696-5300, or by completing a complaint form.