Archive

January 13, 2017

Nearly 4,500 students victimized by the now-defunct American Career Institute (ACI) in Massachusetts will have their federal student loans forgiven by the U.S. Department of Education, Massachusetts announced. The announcement marks the first time the Department has granted a state attorney general’s application to cancel loans for a group of defrauded students. According to the Department, students who attended any of ACI’s five career training schools in Massachusetts – Braintree, Cambridge, Framingham, Springfield, and Woburn – will have their loans discharged based on deceptive and illegal practices uncovered by the AG’s investigation into the former for-profit school. In addition to federal loan discharges, former ACI students will also be entitled to refunds of any payments made on their federal loans. The combined borrower loan discharges for ACI students announced will total roughly $30 million. MA

December 15, 2016

DeVry University and its parent company have agreed to a $100 million settlement of a FTC lawsuit alleging that they misled prospective students with ads that touted high employment success rates and income levels upon graduation. The FTC settlement secures significant financial redress for tens of thousands of students harmed by DeVry’s conduct. Under the settlement resolving the FTC charges, DeVry will pay $49.4 million in cash to be distributed to qualifying students who were harmed by the deceptive ads, as well as $50.6 million in debt relief. The debt being forgiven includes the full balance owed—$30.35 million—on all private unpaid student loans that DeVry issued to undergraduates between September 2008 and September 2015, and $20.25 million in student debts for items such as tuition, books and lab fees. FTC

November 22, 2016

A national loan servicer responsible for handling millions of student loan accounts across the country has agreed to pay $2.4 million over allegations that it failed to properly process struggling Massachusetts students’ applications for federal repayment plans intended to lower their monthly payments and engaged in harassing debt collection practices, amongst other violations of state and federal law. The assurance of discontinuance, alleges that ACS Education Services (ACS), which services federal loans made under the Federal Family Education Loan (FFEL) program along with private loans, also charged some borrowers excessive late fees, failed to protect some active-duty service members as required by federal law, and made excessive phone calls to borrowers. MA

November 18, 2016

New York announced a $25 million settlement agreement against Trump University. Under the terms of the settlement, over 6,000 victims will receive restitution and Trump University will pay up to $1 million in penalties to the State of New York for violating state education laws. NY

September 12, 2016

The CFPB took action against for-profit college chain Bridgepoint Education, Inc. for deceiving students into taking out private student loans that cost more than advertised. Bridgepoint has been ordered to pay an $8 million civil penalty, discharge all outstanding private loans the institution made to its students and to refund loan payments already made by borrowers. CFPB

August 24, 2016

The insurance carrier for defunct, for-profit cosmetology school B&H Education, Inc., which operated the Marinello Schools of Beauty in locations across Southern California, agreed to pay $8,631,000 to resolve allegations the school violated the False Claims Act by obtaining federal student loan funds for ineligible students who received bogus high school diplomas.  The allegations originated in a whistleblower lawsuit filed by six former B&H employees under the qui tam provisions of the False Claims Act.  The whistleblowers will collectively receive a whistleblower award of $2.5 million from the proceeds of the government's recovery.  In addition to the $8.6 million payment, the insurer will also pay $2,369,000 to the six whistleblowers’ attorneys.  DOJ (CDCA)

August 24, 2016

Six former employees of defunct for-profit cosmetology school B&H Education, Inc., which operated the Marinello Schools of Beauty in locations across Southern California, will receive a whistleblower award of $2.5 million from the $8.6 million B&H's insurance carrier agreed to pay to resolve allegations that B&H violated the False Claims Act by obtaining federal student loan funds for ineligible students who received bogus high school diplomas.  DOJ (CDCA)

August 22, 2016

The CFPB sued Wells Fargo Bank for illegal private student loan servicing practices that increased costs and unfairly penalized certain student loan borrowers.  The consent order requires Wells Fargo to pay at least $410,000 to compensate consumers for illegal late fees, improve its consumer billing and student loan payment processing practices, and pay a $3.6 million civil penalty to the CFPB.  CFPB

August 3, 2016

New York announced that Keisha Relf Davis, a New York State Department of Education vocational counselor, pleaded guilty to taking part in a scheme that stole over $2.3 million from New York State. As part of the scheme, Relf Davis, in exchange for cash bribes, approved students for the Office of Adult Career and Continuing Education Services’ Vocational Rehabilitation Program (“ACCES-VR”), although these students never applied to the program. The ACCES-VR program was created to help eligible New Yorkers with disabilities and functional limitations gain self-dependence through education, training, and employment. Relf Davis knew that the students she approved did not have disabilities or functional limitations to qualify for this program. NY

July 8, 2016

California announced that the Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a settlement agreement with K12 Inc., a for-profit online charter school operator, and the 14 affiliated non-profit schools known as the California Virtual Academies (“CAVA Schools”) that it manages, over alleged violations of California’s false claims, false advertising and unfair competition laws. As part of the settlement, which is subject to court approval, K12 will provide approximately $160 million in debt relief to the non-profit schools it manages—“balanced budget credits” that were accrued by the schools as a result of the fee structure K12 used in its contracts—and will pay $8.5 million in settlement of all claims. In addition, K12 has agreed to implement significant reforms of its contracts with the CAVA Schools, undergo independent reviews of its services for students with disabilities, ensure accuracy of all advertisements, and provide teachers with sufficient information and training to prevent improper claiming of attendance dollars. CA