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Settlement With Education Company to Eliminate $493.7M in Student Debt

For-profit school Career Education Corp. (CEC), which runs many colleges across the country, has agreed waive millions in debt owed by 179,529 students.

The Illinois-based company entered into a settlement with Iowa Attorney General Tom Miller and 48 other attorneys general to forgo collecting $493.7 million in student debts and to amend its enrollment and recruitment practices.

The settlement brings an end to the four-year investigation launched by a group of attorneys general in 2014 after receiving student complaints alleging CEC of using emotionally charged language to pressure them into enrolling and deceiving students about total enrollment costs.

“CEC’s practices were unfair to students as well as taxpayers who supported federal student loans that were destined to fail,” Miller said.

“This agreement not only provides relief to former students but also protects future students and advances our efforts to clean up the for-profit education industry.”

The complaint also alleged the company of misleading students about the transferability of credits and deceiving students about its graduation rate. Later, the U.S. Senate Health, Education, Labor, and Pensions Committee also came out with critical reports against the company practices.

In a similar lawsuit in July 2018, former students of DeVry University sued its parent corporation, Adtalem Global Education, Inc., and the university for using deceptive marketing practices to lure prospective students. These practices included severely inflating its job placement rate, as well as the earnings of its graduates through an aggressive marketing scheme grounded on ‘deceptive’ data and ‘flawed’ methodologies.

 

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