AG: $2.1M in student loans to 1,400 TN students to be forgiven

News release from Tennessee Attorney General’s office
Tennessee Attorney General Herbert H. Slatery III, along with the Tennessee Division of Consumer Affairs, today announced a settlement with Education Management Corporation (EDMC) that will lead to major reforms and student loan forgiveness. As part of the agreement, EDMC, a for-profit education company, is required to significantly reform its recruiting and enrollment practices, and forgive more than $2.1 million in loans for over 1,400 former Tennessee students.

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.

Tennessee, along with 38 states and the District of Columbia, conducted a multistate investigation after receiving complaints from current and former EDMC 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.

“This agreement holds EDMC accountable to Tennessee students in two very important ways,” General Slatery said. “It not only provides some relief to a large number of former students through loan forgiveness, but it also helps ensure that the company will make substantial changes to its business practices for future students.”

Under the agreement, EDMC must:

• Not make misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, and licensure requirements.

• Provide prospective students with a single page disclosure outlining the anticipated total cost, median debt for those who complete the program, and a warning that credits may not transfer to other institutions.

• Require every prospective student utilizing federal student loans or financial aid to submit information to the interactive Electronic Financial Impact Platform (EFIP) in order to obtain a personalized picture of the student’s projected education program costs, estimated debt burden and expected post-graduate income.

• Not enroll students in programs that do not lead to state licensure when that is required for employment

• Require incoming undergraduate students with fewer than 24 credits to complete an orientation program prior to their first class.

• Permit incoming undergraduate students at ground campuses to withdraw within seven days of the beginning of the term or first day of class (whichever is later) without incurring any cost.

• Permit incoming undergraduate students in online programs with fewer than 24 online credits to withdraw within 21 days of the beginning of the term without incurring any cost.

The agreement is expected to provide an average of $1,370 per person in loan forgiveness.

Students eligible to receive automatic debt relief related to outstanding EDMC institutional loans are those who 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.

“This settlement is another great example of cooperation between the Attorney General’s Office and the Tennessee Division of Consumer Affairs for the benefit and protection of Tennessee consumers,” said Tennessee Department of Commerce and Insurance Deputy Commissioner Bill Giannini.

Consumers may file complaints regarding unfair or deceptive conduct by going online to www.tn.gov/consumer or calling the TDCI Division of Consumer Affairs at (615) 741-4737 or toll-free in Tennessee at 1-800-342-8385.