Education Law

For-profit school strikes $10M settlement deal over charges it inflated job-placement rates

The for-profit Career Education Corp. agreed on Monday to a $10 million settlement, with $9.25 million to go to former students and $1 million in fees to settle charges it inflated job-placement rates.

The New York attorney general’s office announced the settlement with the Illinois-based company, according to a NY AG news release and the Wall Street Journal.

“Students pay thousands of dollars to for-profit colleges because they rightly believe education is the ticket to success in their careers. That’s why it’s so unfortunate that this company exploited students’ aspirations and published misleading information,” Attorney General Schneiderman said in the release. “Students deserve–and the law requires–accurate data when schools publish it for prospective students.”

The WSJ reports that Career Education Corp. told prospective students that between 55 and 80 percent of students found jobs after completing their programs. The reality was that only 24 to 64 percent found employment.

The settlement is part of a yearslong investigation of for-profit schools and other investigations are ongoing, the WSJ notes.

Under the agreement, CEC will use $9.25 million to compensate students who graduated from New York campuses and other New York residents who graduated from online programs.

The agreement also dictates that CEC provide placement assistance, and requires new rules for calculating and disclosing placement rates–rules that exceed requirements of CEC accreditors. In addition, CEC must hire an independent company to verify all placement rates for a three-year period and imposes requirements for what types of employment is counted as “placement.”

CEC has 75,000 students on 75 campuses.

“This agreement closes an important chapter and allows us to move forward with a heightened focus on student outcomes, including our critically important job placement services,” company spokesman Mark Spencer said in a statement to the WSJ. “We remain committed to continually advancing our culture of adherence to legal, regulatory and accreditor requirements, and we’re a stronger organization for having addressed these concerns.”

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