Career Education Corporation, a for-profit company that operates two national chains of colleges, has agreed to a deal that will forgive $500 million worth of student debt, according to the Associated Press.
The agreement settles allegations that the company misled prospective students about job placement rates. About 34,000 students are enrolled in the two college chains, Colorado Technical University and American InterContinental University. State attorneys general have been investigating the company since 2014, and the United States Senate even issued a report on the company’s placement data falsification. Career Education Corporation (CEC) denies any wrongdoing.
The settlement is valid in 48 states and the District of Columbia. New York State previously settled with the company, and California is negotiating its own settlement. Borrowers in Florida and Texas will see the greatest relief in the settlement, two states with former students carrying, combined, more than $100 million in institutional loans issued by CEC. Included in the settlement is $5 million earmarked for states to cover the cost of the investigations.
According to CEC, nearly 90% of its students opt for online courses. Under the terms of the deal, prospective students considering either Career Education Corporation college must receive a one-page disclosure that details anticipated costs, the average earnings of graduates, and job placement rates.
Studies have shown that students that attend for-profit colleges can even end up making less money after receiving a degree than they made before earning a diploma. One reason for that relative decline in earnings? You guessed it: debt.