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Minnesota wants for-profit college students’ loans forgiven

By Christopher Magan, Pioneer Press
May 13th, 2016

student loans

State officials claim students were ‘misled’ by for-profit colleges

Minnesota Attorney General Lori Swanson is expanding her campaign to help students she says were misled by for-profit colleges.

Swanson announced she is asking the U.S. Department of Education to forgive loans for students who attended the now-defunct Anthem College that had a campus in St. Louis Park. Students claim Anthem lied about the value of their degrees and because the school closed in 2014 and is bankrupt they have no other remedies.

Swanson’s request for loan forgiveness is the latest effort by her office to increase scrutiny of the for-profit college industry. Swanson has pursued legal action against several schools and she said more investigations are pending.

“This is the exploitation of students’ American dream,” Swanson said. “It is at the top of the pile in terms of my concerns about the harm that comes through consumer fraud.”

Attorneys general in two-dozen states have investigated the for-profit industry for similar infractions.
Steve Gunderson, president and CEO of the Association of Private Sector Colleges and Universities, said for-profit schools often outperform their public and private counterparts. He added that there are good and bad institutions in every sector of higher education and called the recent scrutiny politically motivated.

Anthem told students degrees from the school in X-ray technology would qualify them to work as radiological technicians when they did not, Swanson said. The school also allegedly lied to students about the transferability of credits they earned at the school.

Those claims are similar to the allegations Swanson made in a lawsuit against Globe University and the Minnesota School of Business concerning the schools’ law enforcement programs. The case went to trial last month and a judge is expected to issue a verdict later this summer.

At trial, lawyers for the schools denied the state’s allegations that prospective students were systematically misled. School attorneys said any inaccurate claims made to students came from rogue employees who were not following school policies.

The student-loan forgiveness Swanson is requesting from the U.S. Department of Education is similar to a program available to students who claim they were defrauded by the former Corinthian Colleges chain.

Most of the schools in the Corinthian chain were bought in 2015 by the locally based nonprofit Zenith Education Group. Corinthian leaders were forced to sell the schools after they lost access to federal student loans amid allegations they provided inaccurate data about graduates’ career successes.

Zenith is affiliated with the Oakdale-based Education Credit Management Corporation, or ECMC, a student-loan collection agent.

Swanson has also been critical of the organization charged with oversight of Globe, the Minnesota School of Business, Anthem and some Corinthian schools. Last month, Swanson joined a dozen state attorneys general in asking the federal government to revoke the oversight authority of the Accrediting Council for Independent Colleges and Schools, or ACICS.

The attorneys general said ACICS was unfit to oversee colleges and universities. The organization’s leader stepped down shortly after the request and ACICS’ board chair issued a statement that the concerns were being taken very seriously.

An ACICS leader was not available for comment.

Swanson says the for-profit college industry needs better regulations to protect students.

“ACICS has been anything but a watchdog,” Swanson said. “They have not adequately policed for-profit colleges.”

For more information on the Minnesota Attorney General’s oversight of for-profit colleges, go to ag.state.mn.us/Brochures/pubForProfitColleges.pdf.

To file a consumer complaint call 1-800-657-3787 or visit ag.state.mn.us/Office/Complaint.asp.

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