For-profit college agrees to loan forgiveness in Missouri, Kansas, 37 other states

Nearly 2,600 former Missouri and Kansas students of a national for-profit college operator will share in $102.8 million in loan forgiveness, according to the state’s attorney general.

Education Management Corp. reached the agreement with attorneys general in 39 states and the District of Columbia. The Pittsburgh-based company was accused of compensating employees based on how many students they enrolled, in violation of a federal regulation.

Its schools include Brown Mackie College-Kansas City, which is in Lenexa, and the Art Institutes International, which announced in May it was closing its Lenexa campus once current students completed their programs.

Art Institutes International is not affiliated with the Kansas City Art Institute, a private, four-year college in Kansas City.

In Missouri, the company will forgive $1.965 million in student debts of 1,586 former students, attorney general Chris Koster said in an announcement. IN Kansas, attorney general Derek Schmidt said more than 1,000 students will receive more than $1 million in loan forgiveness.

They are among 80,000 Education Management Corp. students receiving loan forgiveness.

“This agreement holds the corporation accountable for its practices and creates a new level of transparency for students going forward,” Koster said.

The accord requires a new interactive online financial disclosure tool, bars misrepresentations to prospective students and enrollment in unaccredited programs, and creates an extended period during which students can withdraw from schools without incurring a financial obligation. It was announced Monday by the U.S. Justice and Education departments and the attorney generals of Connecticut and Iowa. Education Management Corp. did not admit to the conduct charged by the attorneys general.

The company operates schools under the brands of the Art Institutes, Argosy University, Brown Mackie College and South University in 110 locations in 32 states and Canada. Students can earn college and graduate degrees in fields including food preparation, business, fashion and information technology.

The for-profit college sector has been imploding, as federal and state regulators have been reining in schools, accusing them of preying on low-income students and saddling them with student loans they can’t repay. Corinthian Colleges collapsed earlier this year in the largest shutdown in U.S. higher education, and the government is in the process of forgiving loans to some former students.

This story was originally published November 16, 2015 at 12:16 PM with the headline "For-profit college agrees to loan forgiveness in Missouri, Kansas, 37 other states."