South University has a school at West Broad Village. Photo by Michael Schwartz.
The owner of a chain of for-profit universities with operations in Richmond has agreed to pay millions of dollars to settle state and national investigations, including forgiving loans to thousands of its past students in Virginia.
Education Management Corp., the Pittsburgh-based company that owns South University, The Art Institutes and other for-profit schools, announced an agreement this week with 39 state attorneys general and the federal government to settle allegations that it used deceptive recruiting practices to lure students into degrees that were often less valuable than advertised and illegally paid bonuses to recruiters to aggressively sign students on.
As part of the state settlements, EDMC has agreed to forgive $102 million in private student loan debt owed by some 80,000 of its former students. A portion of that total – about $2.2 million – will trickle down to Virginia and offer loan forgiveness to about 2,000 of the company’s former students in the state.
The company also agreed to pay $95 million to settle the federal investigation, which was the result of a whistle-blower claim related to allegations that it paid incentives to steer recruiters toward signing on more students, in violation of federal laws designed to prevent enrollment of unqualified applicants.
EDMC operates locally with a South University location in West Broad Village, where it opened in 2010. Its other Virginia locations include Art Institutes outposts in Dulles, Arlington and Virginia Beach. South University has one other Virginia location in Virginia Beach.
The agreements are a result of a lengthy investigation into the company’s practices that led to coordinated effort among the 39 states.
In Virginia, state Attorney General Mark Herring filed a civil complaint against the company in Henrico County Circuit Court earlier this week.
It alleged “deceptive and misleading student solicitations touting educational benefits that were available to few EDMC students.”
Herring’s case also claimed EDMC misled students about the true costs of the programs, made inaccurate claims about its accreditations and misrepresented job placement rates and graduation rates of its students.
Herring said in a statement this week: “Our investigation produced a pretty clear picture of how EDMC recruited prospective students into its programs and how many of those students left the program with tremendous debt and unfulfilled promises.”
Herring’s complaint in Henrico cited inflated reports of job placements after graduation, and gave examples of graduates of EDMC’s business management degree program working as customer service reps at a retail store and one of its accounting students working as a cashier at a fast food restaurant.
“Virginia students are entitled to rely on accurate, complete information when deciding whether a school is right for them. That includes a realistic explanation of the costs and likely benefits from the program they’re considering,” Herring said in the suit. “EDMC’s practices were unfair to Virginia students and to taxpayers who backed many of the federal student loans that were destined to fail.”
The judgement entered against the company in Virginia will attempt to prohibit it from repeating the deceptive practices, improve its disclosures about costs, graduate and job placement rates and will institute a series oversight measures aimed at monitoring EDMC going forward.
National reports stated that the federal settlement was the largest ever reached with for-profit college company related to False Claims Act violations.
As of last year, the company had more than 100,000 students enrolled at its 110 locations and online.
South University has a school at West Broad Village. Photo by Michael Schwartz.
The owner of a chain of for-profit universities with operations in Richmond has agreed to pay millions of dollars to settle state and national investigations, including forgiving loans to thousands of its past students in Virginia.
Education Management Corp., the Pittsburgh-based company that owns South University, The Art Institutes and other for-profit schools, announced an agreement this week with 39 state attorneys general and the federal government to settle allegations that it used deceptive recruiting practices to lure students into degrees that were often less valuable than advertised and illegally paid bonuses to recruiters to aggressively sign students on.
As part of the state settlements, EDMC has agreed to forgive $102 million in private student loan debt owed by some 80,000 of its former students. A portion of that total – about $2.2 million – will trickle down to Virginia and offer loan forgiveness to about 2,000 of the company’s former students in the state.
The company also agreed to pay $95 million to settle the federal investigation, which was the result of a whistle-blower claim related to allegations that it paid incentives to steer recruiters toward signing on more students, in violation of federal laws designed to prevent enrollment of unqualified applicants.
EDMC operates locally with a South University location in West Broad Village, where it opened in 2010. Its other Virginia locations include Art Institutes outposts in Dulles, Arlington and Virginia Beach. South University has one other Virginia location in Virginia Beach.
The agreements are a result of a lengthy investigation into the company’s practices that led to coordinated effort among the 39 states.
In Virginia, state Attorney General Mark Herring filed a civil complaint against the company in Henrico County Circuit Court earlier this week.
It alleged “deceptive and misleading student solicitations touting educational benefits that were available to few EDMC students.”
Herring’s case also claimed EDMC misled students about the true costs of the programs, made inaccurate claims about its accreditations and misrepresented job placement rates and graduation rates of its students.
Herring said in a statement this week: “Our investigation produced a pretty clear picture of how EDMC recruited prospective students into its programs and how many of those students left the program with tremendous debt and unfulfilled promises.”
Herring’s complaint in Henrico cited inflated reports of job placements after graduation, and gave examples of graduates of EDMC’s business management degree program working as customer service reps at a retail store and one of its accounting students working as a cashier at a fast food restaurant.
“Virginia students are entitled to rely on accurate, complete information when deciding whether a school is right for them. That includes a realistic explanation of the costs and likely benefits from the program they’re considering,” Herring said in the suit. “EDMC’s practices were unfair to Virginia students and to taxpayers who backed many of the federal student loans that were destined to fail.”
The judgement entered against the company in Virginia will attempt to prohibit it from repeating the deceptive practices, improve its disclosures about costs, graduate and job placement rates and will institute a series oversight measures aimed at monitoring EDMC going forward.
National reports stated that the federal settlement was the largest ever reached with for-profit college company related to False Claims Act violations.
As of last year, the company had more than 100,000 students enrolled at its 110 locations and online.