Update: For-Profit College Giant Settles Fraud

January 02, 2016

Education Management Corp. (EDMC) settled an illegal recruiting and consumer fraud whistleblower lawsuit with the U.S. government for $95.5 million. Attorney General Loretta E. Lynch said, “Operating essentially as a recruitment mill, EDMC’s actions were not only a violation of federal law but also a violation of the trust placed in them by their students—including veterans and working parents—all at taxpayer expense.” The lawsuit claimed EDMC, which has approximately 100,000 students in 32 states, had received some $11 billion through aggressive recruiting from 2005 through 2011—with 90% financed by taxpayers through student aid programs.

Separately, EDMC also agreed with state attorneys general to forgive $102.8 million in unpaid loans of former students. Loans of current students aren’t affected by the settlement. The settlement also includes agreement to increase transparency in the recruiting process and to avoid compensation based on number of new students enrolled. The settlement includes agreement to be more transparent in recruiting in terms of completion and post-graduation prospects.

Taxpayers deserve better stewardship of their resources, and students deserve a better return for their time and effort.

See The Student Debt Crisis for more details about the questionable practices of some schools that contribute to the growing problems around student loans.