Commonwealth of Virginia
Office of the Attorney General
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Charlotte Gomer, Press Secretary
Mobile: (804) 512-2552
ATTORNEY GENERAL HERRING CALLS ON SECRETARY DEVOS TO EXTEND TIMEFRAME FOR LOAN FORGIVENESS FOR STUDENTS ENROLLED IN CLOSED SCHOOLS OPERATED BY DREAM CENTER EDUCATION HOLDINGS
~ Dream Center Education Holdings took over Virginia schools previously operated by Education Management Corporation (EDMC) following a $2.29 million settlement EDMC reached with AG Herring ~
RICHMOND (October 17, 2019) – Attorney General Mark R. Herring today has joined a bipartisan coalition of 30 state attorneys general in calling on U.S. Education Secretary Betsy DeVos to extend the timeframe for student loan forgiveness for students enrolled in schools that were operated by Dream Center Education Holdings (DCEH) that are now closed. The letter details extraordinary misconduct and mismanagement by DCEH, which prevented students from obtaining degrees and unfairly left them to repay federal student loan debt from their time attending the failed schools.
"These students are the victims of DCEH's mismanagement and misconduct and they deserve to have their student loan debt forgiven as allowed under the law,” said Attorney General Herring. "I am calling on Secretary DeVos to extend the timeframe for student loan discharge so we can make sure that all Virginians who were cheated out of an education by DCEH receive the debt forgiveness they deserve.”
Attorney General Herring and his colleagues write in the letter that a "wide variety of regulators, including the U.S. Department of Education have found that DCEH violated numerous federal and state laws, was noncompliant with accreditors and grossly mismanaged its schools—including Argosy University, the Art Institutes, and South University—leading to the schools' recent closures. These closures prevented students from completing their programs of study, leaving borrowers with substantial student loan debt and nothing to show for it.”
Under the closed school discharge rule, former students may be eligible for a 100 percent discharge of their federal student loans if they were unable to complete their program because their school closed. Closed school discharge is only allowed for students who were enrolled at the time the school closed; were on an approved leave of absence when the school closed; or withdrew within 120 days of the school's closure, unless the Secretary approves a longer period.
The letter details the myriad of ways in which DCEH violated federal and state law, and grossly mismanaged the schools, which led to the schools' rapid closures in less than 18 months after DCEH acquired the entities. Two egregious examples include:
- DCEH failed to inform students that two of its schools lost their accreditation for several months—during which time students registered for additional terms and incurred additional debts, for credits that could not be used.
- DCEH failed to distribute over $16 million in federal loan credit balance refunds to students. These were student loan stipends that were often used for food and housing expenses.
DCEH took over schools that had previously been operated by Education Management Corporation (EDMC) following a 2015 settlement EDMC reached with Attorney General Mark Herring and other state attorneys general over their alleged deceitful practices. Under the terms of the settlement, EDMC forgave more than $2.29 million in loans for approximately 2,000 former students in Virginia. EDMC operated four education systems including Argosy University, The Art Institutes, Brown Mackie College, and South University, offering programs both online and at branch campuses in Virginia cities including Richmond, Virginia Beach, and Arlington.
Joining Attorney General Herring in sending the letter to Secretary DeVos were the attorneys general of California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Washington, and Wisconsin.
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