Settlement secures $2.1 million in student debt relief for former Argosy students

Diving Brief:

  • Ten attorneys general recently reached a deal to forgive student debt incurred by those who attended collapsed for-profit Argosy University before the institution abruptly closed in 2019.
  • the the agreement has been reached with the current owners of student debt that Argosy students borrowed from the university. It will be filed in federal receivership court, according to an announcement. Overall, the agreement cancels nearly $2.1 million in student loans that Argosy has directly issued to students at a dozen campuses.
  • Attorneys general alleged that Argosy misrepresented itself as a non-profit institution and provided students with misleading information that prevented them from making sound financial decisions.

Overview of the dive:

The deal is the latest development in a nonprofit’s failed bid to buy and run a chain of for-profit institutions and turn them into nonprofits.

The series of events that led to Argosy’s closure highlighted several major problems in higher education that the Biden administration hopes to address by tightening regulations around for-profit universities. These upcoming rules are expected to deal with loan releases when colleges close, which can leave students scrambling to figure out what’s next. U.S. Department of Education officials are also taking a closer look at deals to turn for-profit universities into nonprofits under new owners.

In 2017, the faith-based nonprofit Dream Center took its first steps into the world of higher education when he acquired Art Institutes and Argosy University of Education Management Corp., which had been accused shortly before of violating consumer protection laws.

At the time, the Department of Education tentatively approved the sale but did not formally approve the institutions’ transition to nonprofit status. The agency said it would have to thoroughly review the Dream Center’s capabilities before giving the green light to the sale and conversion.

However, Argosy’s finances suffered under Dream Center ownership, with the organization facing insolvency only a year later. In February 2019, Ed department revoked Argosy’s eligibility for federal financial aid due to poor finances and denied change of ownership. The university abruptly closed campuses a month later. Although the Dream Center successfully sold some Art Institute campuses, several closed.

Attorneys general have accused Argosy and its owner of making a series of false statements to students. For example, the Argosy website declared the university to be a “not-for-profit academic institution” even though the conversion had not yet been approved.

The agreement also states that the Dream Center announced the campus closures via email in July 2018, but did not provide the dates of those closures or information about student options. Later that month, the Dream Center distributed guidance to campus presidents about student options, but those communications initially did not include clear information about their ability to apply for closed school loan waivers, according to the report. ‘OK.

“Argosy University students, through no fault of their own, ended up with debt and even negative credit scores — but not the degrees they were promised,” the Illinois attorney general said. Kwame Raoul. in a report. “I am pleased with this agreement which provides relief to these students and holds Argosy accountable to the students left behind when the school abruptly closed.”

The attorneys general of Arizona, Colorado, Florida, Georgia, Hawaii, Minnesota, Tennessee, Utah and Virginia were also part of the settlement.

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