The nation’s second-largest for-profit college company, Education Management Corp., will pay more than $95 million to settle multiple lawsuits alleging the company broke federal law in how it paid its recruiters.
The settlement deal, announced by the U.S. Department of Justice on Monday, also includes loan forgiveness for some students who enrolled at EDMC schools. The company, which did not acknowledge any wrongdoing, operates the Art Institutes, Argosy University, Brown Mackie College and South University.
There are seven Florida campuses: Miami, Fort Lauderdale, West Palm Beach, Sarasota, Orlando, Tampa and Jacksonville. A spokesman for Florida Attorney General Pam Bondi said that Florida students would receive $6.5 million in loan forgiveness.
In a Washington news conference carried on C-SPAN, U.S. Attorney General Loretta Lynch called the settlement a “historic step forward in our collective and ongoing fight against fraudulent and abusive practices in the for-profit education industry.”
But Lynch acknowledged that the $95 million payout would have been higher if not for EDMC’s current financial problems. The gigantic company has been closing campuses and laying off hundreds of employees — a dramatic fall from a few years ago, when it counted Goldman Sachs as one of its owners, and was trading at $18 a share on the NASDAQ stock exchange.
“An important part of this settlement was factoring in the company’s ability to pay,” Lynch said. “So it does not reflect the total amount of federal funds that we believe were fraudulently obtained.”
Pittsburgh-based EDMC still enrolls more than 100,000 students, and still gets about 90 percent of its revenue from taxpayer-funded financial aid programs such as Pell grants and federal student loans, Lynch said. Over the years, EDMC received billions of dollars in Pell grants and loans — a U.S. Senate Committee found EDMC received $1.8 billion in federal funds in a single year, 2010.
“That’s all of our money, all of us, as taxpayers,” U.S. Secretary of Education Arne Duncan said Monday.