Oregon was a lead state in the legal fight against Career Education Corporation, a for-profit college chain, which has agreed to forgive $493.7 million in student debt.
The huge settlement comes amid a national debate over for-profit colleges, that's heightened in the last year and a half under U.S. Secretary of Education Betsy DeVos. Under President Obama, for-profit colleges were a regulatory target of federal investigators. But DeVos has shown a preference to defend or relax rules for the colleges, even as states have continued to investigate them.
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This week, Oregon justice officials announced an agreement they helped reach with a for-profit college chain, saving about 180,000 students a whopping half-billion dollars in debt.
Career Education Corporation ran numerous for-profit colleges across the country, including Le Cordon Bleu and Sanford-Brown College in Portland, as well as a branch of its online American InterContinental University program.
In the settlement, the college chain agreed to forgive $493.7 million of debt across 48 states — not including millions more in an anticipated settlement with California. A statement from Career Education Corporation pegs the total write-off at $556 million, though the company downplayed its significance, saying, "all but approximately $1.3 million of these old accounts receivable were written-off in prior reporting periods in the ordinary course of the company's operations."
The agreement covers 2,185 Oregon students and $6.1 million, according to the state Justice Department. The average debt forgiven in Oregon and nationally is about $2,800 per student.
Oregon Attorney General Ellen Rosenblum said Career Education students got “mounds of student debt and often not much to show for it.”
"Our multi-state investigation found that students were deceived by CEC about the actual cost of these programs, misled to think that certain credits could transfer, and were overpromised that they could land jobs when the program ended,” Rosenblum said in a written statement.
According to the Oregon DOJ, the college chain agreed to multiple conditions for any programs it may continue to operate.
It can't make false claims about "accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans’ benefits, or licensure requirements."
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Career Education can't run career-oriented programs that require licenses to get jobs, without preparing students for those licenses. The colleges also have to provide a one-page disclosure that delineates costs, potential debt and earnings, as well as data on the transferability of credits and job placement. Recruiting phone calls and online chats are supposed to be recorded and retained for outside review. The colleges also have to support new students who may be at risk of dropping out, and they have to offer students a "risk-free trial period," when they start.
In a written statement, Career Education Corporation denied any wrongdoing, and highlighted the changes it agreed to as potentially benefiting students.
"The agreements build upon the significant compliance monitoring processes the company has adopted over the past several years with commitments to a number of additional operational initiatives that will benefit our students," the statement read.
The Oregon DOJ said Career Education programs are no longer operating in the state. But Career Education CEO Todd Nelson suggested the college chain is not folding, but is working to prove itself.
“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,” Nelson said.