Lisa Madigan Squeezes $3 Million in Student-Loan Relief Out of Deceptive Schools

Almost 3,000 college students in Illinois will see $3 million in debt relief after a settlement with a for-profit college education company that whistleblowers claimed misled students about education costs and job placement rates.

As part of the settlement with Education Management Corporation (EDMC), the company will forgive more than $3 million in loans for Illinois students, will be required to significantly reform recruiting and enrollment practices, and return $1.9 million fraudulently obtained from the state of Illinois.

The company runs five colleges in the state: Illinois Institute of Art in Tinley Park, Illinois Institute of Art in Chicago, Illinois Institute of Art in Schaumburg, Argosy University Chicago and Argosy University Schaumburg. A larger consumer fraud settlement that spans 39 states and the District of Columbia calls for $102.8 million in outstanding student loan debt relief held by more than 80,000 former students nationwide.

Loans offered through school programs won’t be collected from certain students attending affected schools between 2006 and 2014. Students will be contacted via mail.

“EDMC will be held accountable for deceptive recruitment and enrollment practices that were unfair and misleading to Illinois students,” Madigan said in a press release. “The settlements will provide former students with debt relief, recoup money that was fraudulently obtained from the state, and help ensure the company will make substantial changes to its practices for future students.”

Under one settlement, EDMC will be required to disclose to students the true cost of the school and expectations of job placement after graduation. It bans the school from making misrepresentations to prospective students, prohibits enrollment in programs without accreditation required for state licensure, and institutes an orientation period when new students can withdraw with no financial obligation.

The company also allegedly illegally paid incentives to its admissions recruiters for the number of students they enrolled, a violation of the False Claims Act. A settlement and global agreement with Madigan, the federal government and attorneys general in 11 states and the District of Columbia, calls for EDMC to pay out $95.5 million to resolve the claims, with $1.9 million going to Illinois.