EDMC to Change Practices, Forgive Loans

| November 16, 2015

Olen

ATLANTA — For-profit education company Education Management Corporation (EDMC) will significantly reform its recruiting and enrollment practices, and forgive more than $6,821,268 in loans for approximately 5,826 former students in Georgia, through an agreement with Attorney General Sam Olens 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 Institutes, Brown Mackie College and South University.

In the settlement, EDMC agrees to provide greater disclosures to prospective students and to give students more opportunities to withdraw without incurring costs.

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.

Thomas Perrelli, former U.S. Associate Attorney General, will independently monitor the company’s settlement compliance for three years and issue annual reports.

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.

“This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices,” Attorney General Sam Olens said. “EDMC’s practices were unfair to our state’s students, and they were also unfair to our nation’s taxpayers who backed many of these federal student loans that were destined to fail,” added Olens. “This is a rigorous agreement that not only provides some relief to a large number of former students through loan forgiveness, but helps ensure that the company will make substantial changes to its business practices for future students.”

Consumer Complaints, Multistate Investigation
After receiving numerous complaints from current and former EDMC students, state attorneys general initiated a multistate investigation in January of last year. Attorneys and investigators reviewed consumer complaints, reviewed company documents, and interviewed former EDMC employees.

“Our investigation gave us a pretty clear picture of how EDMC lured prospective students into its programs and how many students left the program with unfulfilled promises and oftentimes tremendous debt,” said Olens. “We think this agreement addresses our biggest concerns about the company’s business practices and puts in place new transparency and accountability.”

As part of the agreement, EDMC does not admit to the conduct alleged by attorneys general.

Office of the Georgia Attorney General

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