For-Profit College Chain to Cancel Debt for Roughly 180,000 Students

By Joelle Fredman, NASFAA Staff Reporter

The for-profit college chain Career Education Corporation (CEC) agreed to cease collecting more than $500 million in debt from roughly 180,000 students last Thursday, following a five-year investigation in which a group of attorneys general argued that it was “misleading prospective students about actual costs, the transferability of credits, accreditation, program offerings, and accurate job placement rates.”

According to arguments brought by attorneys general in 47 states and the District of Columbia, CEC instructed its admissions representatives to tell prospective students about the cost per credit hour while omitting the total number of required hours, deceiving students about the total costs of enrolling. They also argued that the group promised that credits would transfer to other institutions when they would not, hid the fact that some programs did not have the necessary accreditation required for a student to work in the field, and “deceived prospective students about the rate that graduates of CEC programs got a job in their field of study, thereby giving prospective students a distorted and inaccurate impression of CEC graduates’ employment outcomes,” among other offenses.       

"Decisions about higher education are already stressful enough without having to worry about the high cost of obtaining a college education or questioning the value of your degree,” Arizona Attorney General Mark Brnovich said in a press release. "... This settlement will not only help ensure for-profit colleges better represent the truth to prospective students in the future, but it also contains injunctive relief that will help students make better-informed choices moving forward."

Despite agreeing to the settlement, CEC wrote in a press release that it “denied any allegations of wrongdoing or liability.”

“The resolution of this open inquiry is an important milestone for the company that coincides with the completion last month of a multi-year process of teaching out and closing our transitional campuses,” CEC CEO Todd Nelson said in the release. “We have remained steadfast in our belief that we can work with the attorneys general to demonstrate the quality of our institutions and our commitment to students.”

CEC sold almost of all its college chains in 2015, except for Colorado Technical University and American InterContinental University. In addition to financial obligations outlined in the settlement, moving forward CEC was instructed to “provide newly enrolling students an online financial aid interactive tool that can assist in understanding their financial commitments,” and communicate to students more effectively about academic program information during the enrollment process, including a disclosure of refund policies. In addition, the settlement mandated that CEC must work with a third-party to ensure that it is in compliance with these terms.


Publication Date: 1/7/2019

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