Illinois students of for-profit schools to get debt relief

CHICAGO (AP) — About 2,700 Illinois students of for-profit universities run by a Pittsburgh firm will have more than $3 million in loans forgiven under a national settlement announced Monday by federal officials and several state attorneys general.
The settlement resolves a consumer fraud investigation by a coalition of attorneys general, including Illinois' Lisa Madigan, and separate whistleblower lawsuits. Pennsylvania-based Education Management Corp. was accused of using illegal enrollment incentives to pay recruiters and deceptive recruitment and enrollment practices such as exaggerating career placement ability.
EDMC, which didn't admit wrongdoing in the agreement, runs more than 100 schools in 32 states. In Illinois, it operates five colleges in Chicago and its suburbs under the Argosy University and the Illinois Institute of Art brands.
Madigan, whose office recently reached a similar settlement with another for-profit college, called it a warning for students.
"Unfortunately these signification problems are just the latest example of what my office has uncovered when investigating for-profit college operations," Madigan said at a news conference. "You need to get accurate information and you need to be very leery of enrolling."
The debt relief applies to certain students who left school between 2006 and 2014, according to the terms. Students will be contacted in the coming months and officials with Madigan's office said there will be a phone number to call.
The company must make reforms under the settlement that will be independently monitored for at least three years. That includes disclosing costs to students, not enrolling students in programs that do not lead to state licenses required for jobs and allowing students to withdraw early on.
Illinois will also recoup nearly $2 million to resolve allegations that the company violated consumer-related laws. Most of the money from such agreements in Illinois typically goes to the state's general revenue fund.
EDMC officials denied they used illegal enrollment incentives to pay recruiters and exaggerated career-placement ability, but said the company will "provide more transparency during the recruiting process." EDMC already faces financial and regulatory troubles. Eight directors resigned earlier this year as the firm restructured to cut its debt.
Madigan's office reached a similar agreement last month for students of for-profit Westwood College after a 2012 lawsuit. Westwood operates four campuses in Illinois. About 3,600 students will get over $15 million in debt relief. Westwood, owned by Alta College of Denver, announced last week that it would no longer accept new students.
___
Follow Sophia Tareen at https://twitter.com/sophiatareen.