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updated: 1/4/2019 6:55 AM

Career Education to forgive thousands of students' debt in recruiting probe settlement

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  • Schaumburg-based Career Education Corp. Thursday settled with attorneys general from 48 states -- including Illinois -- and the District of Columbia to end a five-year investigation into the for-profit school's recruiting and enrollment practices.In Illinois, 16,852 students will get relief totaling more than $48 million, Illinois Attorney General Lisa Madigan said, which is an average payment of about $2,850 per student. In addition, Illinois will get more than more than $250,000 of the $5 million in expenses.

    Schaumburg-based Career Education Corp. Thursday settled with attorneys general from 48 states -- including Illinois -- and the District of Columbia to end a five-year investigation into the for-profit school's recruiting and enrollment practices.In Illinois, 16,852 students will get relief totaling more than $48 million, Illinois Attorney General Lisa Madigan said, which is an average payment of about $2,850 per student. In addition, Illinois will get more than more than $250,000 of the $5 million in expenses.

 
 

Career Education Corp. on Thursday settled with attorneys general from 48 states -- including Illinois -- and the District of Columbia to end a seven-year investigation into the for-profit school's recruiting and enrollment practices.

As part of the agreement, the Schaumburg-based company denies any allegations of wrongdoing or liability. It will also pay a total of $5 million in expenses to the attorneys general and forgo collecting about $493.7 million in debts owed by 179,529 students nationally, according to Illinois Attorney General Lisa Madigan's office.

In Illinois, 16,852 students will get relief totaling more than $48 million, Madigan said, which is an average payment of about $2,850 per student. In addition, Illinois will get more than more than $250,000 of the $5 million in expenses.

"The resolution of this open inquiry is an important milestone for the company that coincides with the completion last month of a multiyear process of teaching out and closing our transitional campuses," said Career Education CEO Todd Nelson. "We have remained steadfast in our belief that we can work with the attorneys general to demonstrate the quality of our institutions and our commitment to students."

A company spokesman declined further comment Thursday afternoon.

The company's stock rose 2.13 percent to $11.74.

A package of injunctive provisions will also be put in place to protect prospective students, Madigan said. Career Education said those provisions include future students receiving additional information on important policies, academic program information and financial aid information during the enrollment process and an enhanced refund policy -- processes that are expected to be completed within the next six months.

Robert McKenna, a former Washington state attorney general, has been assigned to oversee implementation of the agreement terms during the next three years at a cost of $2 million.

"Today's settlement ensures the company treats students the way they should have been (treated) all along -- with honesty and respect for their futures," Madigan said.

Madigan said the agreement caps a seven-year investigation by her department that was spurred by student complaints and a critical report on for-profit education by the U.S. Senate's Health, Education, Labor and Pensions Committee. The other attorneys general joined her in January 2014.

Thursday's settlement affects all states except New York and California. Career Education reached a $10.25 million settlement with New York in 2013, and the company said California is expected to enter into a similar judgment at a later date.

Career Education, which currently operates online colleges American InterContinental University and Colorado Technical University, was among many for-profit educational institutions that came under scrutiny from federal and state authorities several years ago over recruiting and student loan practices that left students burdened in debt or unable to obtain jobs in their field of study.

At its peak, the company operated up to 10 for-profit institutions nationwide, including Le Cordon Bleu, Sanford-Brown University and International Academy of Design & Technology, but closed or sold many of them during the past five years.