Lawsuit erases $22M in student loan debt for thousands of Arizonans

PHOENIX – Thousands of Arizonans received millions in student loan debt relief as part of a multistate lawsuit against a national education company accused of deceptive practices, the Arizona Attorney General’s Office announced Thursday.

In settling the lawsuit, Career Education Corporation agreed to forgive more than $490 million in debt owed by approximately 180,000 students in 47 states and the District of Columbia.

About 6,200 Arizona students with more than $22 million in outstanding debt were impacted by the settlement, an average of around $3,500 per student.

“Our goal was to provide debt relief and restitution for those that were allegedly conned or ripped off by this for-profit university,” Arizona Attorney General Mark Brnovich told KTAR News 92.3 FM.

“As a result of this settlement, people that have outstanding student debt that was obtained through these specific universities will have that debt removed or relieved.”

Investigators for the states in the lawsuit found evidence that CEC deceived students about costs, misled them about whether credits would transfer to or from other institutions and misrepresented the potential to find employment.

Ten active or defunct CEC colleges are involved, including three that used to have Arizona campuses: Sanford-Brown College, Le Cordon Bleu and Collins College.

“We do know that there are people here in Arizona that obtained student loans through these universities, and as a result of the settlement they’ll be provided debt relief,” Brnovich said.

CEC has closed most of its physical campuses and now operates primarily online as American InterContinental University and Colorado Technical University.

The Illinois-based company’s other defunct schools involved in the lawsuit are Briarcliffe College, Brooks Institute, Harrington College of Design, Katharine Gibbs School – Philadelphia and Missouri College.

Students who already paid off their loans through CEC are not included in the settlement.

Per the agreement, CEC will notify people eligible to have their debt forgiven.

“If someone feels like they’re eligible for debt forgiveness, they should contact CEC directly and let them know they are part of this class of people and that they should be getting some debt relief as well,” Brnovich said.

In addition to the debt relief, CEC agreed to reform its recruiting policies and pay $5 million to fund other investigations into fraud by for-profit education companies. Arizona received $75,000 of that payment.

KTAR News 92.3 FM’s Ashley Flood contributed to this report.

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