Hundreds of Iowans freed from student loan debt

A sample disclosure sheet from a settlement with the Career Education Corp. The company is now required to provide a similar document to prospective students

A Chicago-area for-profit college has agreed to reform its recruiting and enrollment practices and forego collecting about $493 million in student debt owed by 179,529 students.

Other terms of the deal require the company to pay $5 million to states to cover the cost of their investigations, and the company will now be required to give all prospective students a single-page disclosure with information including job placement rates, anticipated costs and the average earnings of graduates.

The agreement covers the District of Columbia and the following states: 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 Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Additionally, the school agreed to stop enrolling students in programs that don't lead to state licenses required for employment, Courthouse News Service reported.

Students who attended a CEC school that closed before January 1, 2019, or who stopped attending AIU or CTU before December 31, 2013, qualify for the debt relief. State attorneys general began looking into CEC in 2014, after complaints from students and a scathing Senate report.

The company closed or phased out many of its schools over the past decade, and included brands such as Briarcliffe College, Brooks Institute, International Academy of Design & Technology, Brown College and Le Cordon Bleu.CEC said it expects to record a pre-tax charge of $6.3 million tied to the settlement. On October 16, a federal judge rejected a challenge to the Borrower Defense Rule, ordering its immediate implementation for students nationwide. Both were in Tukwila.

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CEC is based in Schaumburg, Ill., and now offers primarily online courses through American InterContinental University and Colorado Technical University. For example, the company inaccurately claimed that its graduates were "placed" when they worked only temporarily or were working in unrelated jobs.

In addition to debt relief, the company must give prospective students accurate information about cost, graduation rates, job-placement rates and debt.

Allowing undergraduate students with fewer than 24 credits to withdraw within the first 21 days of the program.

The company denies any allegations of wrongdoing or liability.

"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", Todd Nelson, the company's CEO, said in a statement. NY had already reached its own settlement with CEC, and California is expected to join the 48-state agreement at a later date.

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