Education Fraud

February 1, 2017

Jackson State University agreed to pay $1.17 million to settle charges it violated the False Claims act by mismanaging National Science Foundation grants.  Specifically, a 2012 NSF audit identified salary and non-salary expenditures by Jackson State that were unallowable, not allocable, and/or had insufficient, inadequate and/or no supporting documentation.  A subsequent NSF investigation determined that, in preparation for the audit, and subsequently in response to the preliminary audit findings, Jackson State fabricated time and effort reports and provided them to the auditors, and in some instances presented inadequate and/or no supporting documentation.  DOJ (SDMS)

January 31, 2017

– New York announced a settlement with for-profit education company DeVry Education Group, Inc. and its subsidiaries DeVry University, Inc. and DeVry/New York, Inc. (collectively, “DeVry”). The settlement resolves an investigation that revealed that DeVry lured students with ads that exaggerated graduates’ success in finding employment at graduation and contained inadequately substantiated claims about graduates’ salary success. Many of DeVry’s advertisements centered on a claim that 90% of DeVry graduates who are actively seeking employment obtain employment in their field of study within six months of graduation. The Attorney General’s investigation revealed that the 90% claim was misleading because a substantial number of the graduates included in the 90% figure were graduates who were already employed prior to graduating from DeVry. In fact, many of the graduates included in the 90% were employed before they even enrolled at DeVry. Pursuant to the agreement, DeVry will pay $2.25 million in consumer restitution and $500,000 in penalties, fees and costs. NY

January 18, 2017

Illinois filed a lawsuit against Navient Corporation, its subsidiaries Navient Solutions Inc., Pioneer Credit Recovery Inc. and General Revenue Corporation and Sallie Mae Bank, over widespread abuses across all aspects of its business, including student lending, student loan servicing and student loan debt collection. Madigan’s complaint alleges that Navient’s practices harmed borrowers and put the company’s profits before the interests of millions of student borrowers across the country. For decades, Navient and Sallie Mae have been involved in the business of student lending – from the origination of loans, to the servicing of those loans for repayment, and the collection of loans that enter into default. In this time, Madigan alleged that Navient grew its student loan company into one of the country’s largest by engaging in practices that repeatedly harmed borrowers. IL

January 18, 2017

The CFPB sued the nation’s largest servicer of both federal and private student loans, Navient, for systematically and illegally failing borrowers at every stage by providing bad information, processing payments incorrectly, and failing to act when borrowers complained. Navient also used short cuts and deception to illegally cheat many struggling borrowers out of their rights to lower repayments. CFPB

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