BOSTON — Students of the now-shuttered American Career Institute will have more than $30 million in federal student loans forgiven under a deal announced by Massachusetts’ attorney general.
Attorney General Maura Healey asked the U.S. Department of Education to cancel the loan obligations after her office sued the for-profit school over fraud allegations and the school admitted misleading students.
The decision announced Friday means nearly 4,500 students who attended the school’s five campuses in Massachusetts will have the balance of their loan debt wiped out and will be entitled to refunds for debt payments they’ve already made.
“This is a school that lures students in with promises of great careers and high salaries only to leave them with little or no education and a boatload of unaffordable debt,” said Healey.
U.S. Sen. Elizabeth Warren, a fellow Democrat, said American Career Institute preyed on students to rake in federal loan dollars.
“They didn’t build a business model to say ‘how is it that we can provide the best services?’” Warren said. “They said ‘how can we get access to federal loan dollars and federal guarantees and federal grants and then use that money to spend as little as possible on the educational portion and as much as possible in payouts to the investors.’”
The school operated in Massachusetts and Maryland before closing in 2013.
Mary Colleen Murphy was one of its students.
The Scituate, Massachusetts, mother of four was working as a nursing assistant and wanted to get additional medical training to earn more money to help put her children through college.
She said ACI officials pressured her into a multimedia design-and-graphic arts course with promises of an annual salary of up to $125,000 — even though the class was more than half over. She said they used old books and old software and had teachers unfamiliar with the materials.
“I knew nothing about technology. I was told that I didn’t need to even know how to turn on a computer. That wasn’t the case at all. I was clueless and I struggled,” said Murphy, who ended up $23,000 in debt.
Massachusetts authorities said the school admitted to fabricating records, lying to students and overstating job prospects.
“This is an industry that we know needs heavy policing,” Healey said. “It is an industry rife with deception, rife with predatory practices, and I sure hope that the next secretary of education understands that and takes that seriously.”
Warren also said she’s going to press the new education secretary to crack down on for-profit college scams.
Warren has already said she’s troubled by the record of President-elect Donald Trump’s choice for education secretary, Betsy DeVos. In a letter she sent to DeVos on Monday, Warren said DeVos’ advocacy for school choice, charter schools and school voucher programs should raise alarms for supporters of public education.
Warren sits on the Senate Health, Education, Labor and Pensions Committee, which will hold a hearing on DeVos’ nomination Tuesday.