Private College Agrees to Forgive Half-Billion in Student-Loan Debt
Almost 180,000 former students at for-profit adult education schools headquartered in Illinois will not have to pay back almost $500 million in student loan debt, under a settlement won by 49 state attorneys general, including Illinois AG Lisa Madigan.
The company, Career Education Corporation, is based in Schaumburg and currently runs mostly online schools under the names American InterContinental University and Colorado Technical University.
Eileen Boyce, a spokesperson for Madigan, says the company misled many students about their job prospects after graduation, pressured them to enroll, and deceived them about costs and the ability to transfer credits.
"Many students in Illinois have been defrauded by for-profit entities," says Boyce. "And the settlement assures that not only can the students forgo their loan payments, but that they will be treated better."
Career Education Corporation denied all wrongdoing as part of the agreement. In Illinois, the settlement frees almost 17,000 students from $48 million in debt, averaging just under $2,900 per student.
Boyce says Illinois' new Student Loan Bill of Rights, passed last year, should prevent many of these problems going forward.
"The Student Loan Bill of Rights addresses these problems by requiring student loan servicers to properly process payments, to provide and explain to struggling borrowers all of their repayment options - starting with income-driven plans - and also has created a student loan ombudsman in the Illinois Attorney General's office," says Boyce.
CEC has closed or phased out a number of its schools, including Briarcliffe College, Brooks Institute, Brown College, Harrington College of Design, International Academy of Design and Technology, Le Cordon Bleu, Missouri College, and Sanford-Brown.