HONOLULU – For-profit education company Education Management Corporation (EDMC) will significantly reform its recruiting and enrollment practices, and forgive approximately $183,865.00 in loans for approximately 181 former Hawaii students, through an agreement with Attorney General Doug Chin and a group of state attorneys general.
EDMC, based in Pittsburgh, Pennsylvania, operates 110 schools in 32 states and Canada through four education systems, including Argosy University, The Art Institute, Brown Mackie College and South University.
The Hawaii agreement, through a consent judgment filed in state circuit court, mandates added disclosures to students, including a new interactive online financial disclosure tool; bars misrepresentations to prospective students; prohibits enrollment in unaccredited programs; and institutes an extended period when new students can withdraw with no financial obligation. The case has been assigned to circuit court judge Karl Sakamoto.
Attorney General Doug Chin said “This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices. EDMC’s practices were unfair to Hawaii students. This agreement will provide relief for them through loan forgiveness and ensure that EDMC will make substantial changes to its business practices for future students.”
Nationwide, the agreement requires the for-profit college company to forgive $102.8 million in outstanding loan debt held by more than 80,000 former students. The agreement is expected to provide an average of $1,370 per person in loan forgiveness.
Interactive Financial Disclosure Tool
The agreement will put in place a significant interactive online financial disclosure tool required for all prospective students who utilize federal student aid or loans. The impending online system, called the Electronic Financial Impact Platform (EFIP), is currently under the final stages of development by the U.S. Consumer Financial Protection Bureau (CFPB) and state attorneys general.
Based on a prospective student’s individual data, EFIP will produce a detailed financial report that includes the student’s projected financial commitment, living expenses and potential future earnings.
Attorney General Chin added “Our investigation provided a clear picture of how EDMC lured prospective students into its programs and how many students left the program with unfulfilled promises and tremendous debt. This agreement addresses our biggest concerns about EDMC’s business practices and creates transparency and accountability.”
Under the agreement, EDMC must:
As part of the agreement, EDMC does not admit to the conduct alleged by attorneys general.
Those who will receive automatic relief related to 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 their first term; and their final day of attendance must have been between January 1, 2006 and December 31, 2014.
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For more information, contact:
Joshua A. Wisch
Special Assistant to the Attorney General