Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

FOR IMMEDIATE RELEASE: 
Nov 16 2015

Agreement with Pennsylvania-based company secures reforms, debt-relief for former Argosy University and The Art Institute students

SEATTLE — Washington State Attorney General Bob Ferguson today announced resolution of an investigation into for-profit college company Education Management Corporation (EDMC) for alleged unfair and deceptive business practices. EDMC will significantly reform its recruiting and enrollment practices and provide 1,187 Washington students a total of $1,358,369 in loan forgiveness. Loan forgiveness will apply to qualifying former students of The Art Institute of Seattle and Argosy University’s Seattle campus.

“Student borrowers victimized by deceptive practices deserve loan relief and legal protection,” said Ferguson. “My office will hold accountable any for-profit college that doesn’t play by the rules, or tries to take advantage of the aspirations of Washington students.”

Background

EDMC, based in Pennsylvania, operates 110 schools in 32 states and Canada. In 2014, after troubling media reports about for-profit colleges, including EDMC, multiple Attorneys General from around the nation started an investigation into its recruitment and enrollment practices.

The investigation revealed EDMC used several unfair and deceptive practices including:

  • Targeting students that would not likely benefit from its educational programs;

  • Misleading prospective students about program costs;

  • False claims that students would earn substantially higher incomes after obtaining a degree from EDMC;

  • Misrepresenting EDMC graduates as “placed in the field” based on temporary employment as short as a single day;

  • Inaccurate claims that certain programs were accredited as necessary for graduates to obtain licensure in their profession;

  • Inaccurate claims that EDMC was seeking to have other programs accredited;

  • Accepting leads for potential students from third party lead generators it knew, or should have known, were obtained through deceptive means; and

  • Charging students for classes that commenced after they withdrew from the school.

EDMC to reform business practices moving forward

The agreement, filed in King County Superior Court as part of a multistate resolution with Attorneys General in 39 states plus the District of Columbia:

  • Mandates added disclosures to students prior to enrollment, including a new interactive online financial disclosure tool;

  • Bars misrepresentations to prospective students;

  • Prohibits enrollment in unaccredited programs that will not prepare graduates for jobs in their field; and

  • Institutes a risk free trial period during which new students can withdraw with no financial obligation.

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

Restitution for students

EDMC has agreed to forgive $103 million in outstanding loan debt held by over 73,000 qualifying students nationwide. Of that total, 1,187 Washington students will benefit from $1,358,369 in loan forgiveness. The amounts forgiven represent 100 percent of the outstanding loan debt each eligible student owes to EDMC.

Qualifying former students will receive a letter by March 31, 2016 notifying them that EDMC is foregoing collection on their institutional loan debt, including all interest and fees, and will notify the credit reporting agencies that the loan balance has been reduced to $0.

Those who will receive automatic relief must have been enrolled in an EDMC program with fewer than 24 transfer credits; withdrawn 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.

AG Ferguson efforts to end predatory loan practices

Attorney General Ferguson is committed to ending predatory practices by for-profit colleges in Washington.

Earlier this year Attorney General Ferguson, along with several other Attorneys General, sent letters to the U.S. Department of Education urging assistance for students victimized by predatory practices at Corinthian Colleges and other for-profit schools.

The U.S. Department of Education is currently working with a Special Master to develop a system for borrowers to seek debt relief when schools they attended break the law. Ferguson and his fellow Attorneys General have called upon Education to leverage their expertise and experience in establishing criteria for the discharge of federal student loans, when schools violate state law.  

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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.

Contact:

Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov