Borrower Defense Student Loan Related

Career Education Corporation Student Loan Debt Forgiven

Written by Steve Rhode

North Carolina Attorney General Josh Stein announced a $493.7 million multi-state settlement with for-profit education company Career Education Corp. (CEC). In a settlement with 49 states, including North Carolina, CEC has agreed to reform its recruiting and enrollment practices and forgo collection debts 179,529 students owe nationally. In North Carolina, 4,738 students will receive approximately $9,235,669 in debt relief.

CEC will forgo the collection of debts owed to it by students who either attended a CEC institution that closed before Jan. 1, 2019, or whose final day of attendance at American InterContinental University and Colorado Technical University occurred on or before Dec. 31, 2013. CEC has also agreed to pay $5 million to the states.

“Students who borrow for higher education are investing in their future,” said Attorney General Josh Stein. “I will not allow for-profit schools to prey on those hopes and dreams. This settlement gives North Carolina students who attended a CEC school the debt relief they need for a second chance to get a valuable education.”

The settlement caps a five-year investigation into CEC that revealed evidence demonstrating that CEC deceived prospective students about the total costs of enrollment, the transferability of credits between CEC and other institutions, the potential to obtain employment in their field, and CEC graduates’ employment outcomes.

As a result of these unfair and deceptive practices, students enrolled in CEC who would not have otherwise enrolled, could not obtain professional licensure, and were saddled with substantial debts that they could not repay nor discharge. CEC denied the allegations of the attorneys general investigation but agreed to resolve the claims through this multistate settlement.

Under the agreement, CEC must make no misrepresentations concerning accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, or licensure requirements. The agreement also includes additional requirements that CEC must follow to prevent abusive recruiting practices and provide disclosure to students about anticipated costs, debt burden, and post-graduation employment rates and expected incomes.

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Former students with debt relief eligibility questions can contact CEC.

Attorney General Josh Stein is joined in today’s settlement by the Attorneys General of Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming, and the District of Columbia.

A copy of the settlement can be found here.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

2 Comments

  • Question? If we attended a CEC school and took out loans with Sallie Mae/Navient on the time frame listed, do these loans count towards forgiveness (as stated in this article)? The settlement states only loans with CEC. Is the wording just confusing or did CEC have their own loan dept?

    • The post mentions it is about the debt owed to CEC. If student loans were involved then that is not a debt owed to the school but to the lender or lending agency. Many for-profit schools extend credit to cover fees and expenses as CEC did. Reports say 180,000 students had loans directly with the school over the past 30 years.

      If your loans are private there is not much hope for any forgiveness.

      The action by the Attorneys General could be a basis for a federal student loan Borrower Defense to Repayment claim for federal student loan forgiveness but the Trump Department of Education has gutted that program. See https://getoutofdebt.org/tag/borrower-defense-to-repayment

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