Title

Defunct For-Profit Admits to Defrauding Students

June 7, 2016
 

American Career Institute, a now-closed for-profit institution that operated in Massachusetts and Maryland, admitted to engaging in deceptive schemes and violating state law, according to the state's attorney general. The AG's office sued ACI in 2013, and a consent judgment was issued last week.

"Our office has achieved an unprecedented result against a predatory for-profit school that we hope will yield long overdue relief for thousands of ACI students in Massachusetts," said Attorney General Maura Healey in a news release. "We look forward to working with the U.S. Department of Education to secure immediate loan forgiveness for those affected and will continue to pursue institutions who engage in this illegal and unfair conduct."

ACI falsified student records, misrepresented graduation and job placement rates, deceived prospective students about employment, and unlawfully enrolled and collected tuition from students who did not qualify for federal loans and who didn't meet the minimum education requirements.

The AG's office is requesting the Education Department cancel all federal loans that were taken out by students who attended ACI from at least January 2010 to when the institution closed in January 2013. They estimate that more than 1,400 students are entitled to loan discharges.

The judgment against ACI also called for more than $25 million in penalties, fees, relief and restitution. However, the amounts are largely uncollectible and suspended as a result of the school's insolvency, according to the AG's office. The office was able to obtain more than $2 million in discharges of private student debts owed to ACI in a separate court action, which is expected to help more than 700 former students.

 
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