Attorney General Ellen Rosenblum and 38 state Attorneys General and the District of Columbia today announced a multi-state settlement with Education Management Corporation (EDMC), the for-profit college consortium that operates 110 online and mortar schools, including The Art Institute of Portland. Under the settlement, more than 650 former Oregon EDMC students will have approximately $750,000 in loans forgiven, and the company will significantly reform its recruiting and enrollment practices.

“The massive amount of school debt that Oregon students face each year is overwhelming young adults, and even older ones, who are saddled with debt for life. When a for-profit school impacts Oregon students with what we believe are deceptive recruitment and enrollment practices, we must find some relief for students, and get those practices changed. This settlement stops those practices.” said Attorney General Rosenblum.

The agreement was filed in Marion County Circuit Court, and also mandates added disclosures to students. In total, the agreement requires the company to forgive $102.8 million in outstanding loan debt from more than 80,000 former students throughout the country. The company will also have to use an online financial disclosure tool to help students better understand their financial commitments and loans. Based on a prospective student’s information, the online portal will provide a detailed financial report with the student’s projected financial commitment, living expenses and potential future earnings.

Under the agreement, EDMC must also:

• Not engage in deceptive or abusive recruiting practices, and must record online chats and telephone calls with prospective students.
• Provide a one-page disclosure to prospective students with the anticipated total cost, median debt, default rate for those enrolled in the same program, a warning that credits may not transfer, the median earnings for the program, and job placement rates.
• Reform job placement rate calculations and disclosures to be more accurate.
• Not enroll students in programs that will not prepare graduates for jobs in their field because of lack of accreditation.
• Require incoming undergraduate students with fewer than 24 credits to complete an orientation program prior to their first class.
• Permit incoming undergraduate students at campuses to withdraw within seven days of the beginning of the term or first day of class (whichever is later) without incurring any costs to the student.
• Permit incoming undergraduate students in online programs with fewer than 24 online credits to withdraw within 21 days of the beginning of the term without incurring any costs to the student.
• Require 3rd party marketing vendors to comply with new compliance standards. Vendors cannot make misrepresentations in online ads about federal financing, share student information without their consent, or imply that educational opportunities are actually employment opportunities.

To qualify for the debt reduction, students must have been enrolled in an EDMC program with fewer than 24 transfer credits, withdrew within 45 days of the first day of their first term, and their final day of attendance must have been between January 1, 2006 and December 31, 2014.  Those eligible will be directly notified. As part of the agreement, EDMC does not admit to the conduct alleged.

Students who are not eligible for the automatic debt reduction, but who believe they have claims related to EDMC and federal loans, should contact the U.S. Department of Education Federal Student Aid Information Center (FSAIC): 1-800-4-FED-AID (1-800-433-3243).

Students with general complaints regarding EDMC schools or educational online offerings in Oregon may contact the Oregon Higher Education Commission at (503) 947-5716, or online at http://www.oregon.gov/HigherEd/Pages/complaints.aspx.

Contact:

Kristina Edmunson, Department of Justice, Kristina.Edmunson@doj.oregon.gov, 503-378-6002