Attorney General Rosenblum and 29 State AG’s Write Education Secretary DeVos

October 17, 2019
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Ask to Extend “Closed School Discharge” for Art Institute of Portland Students and Other Schools

Oregon Attorney General Ellen Rosenblum and Minnesota Attorney General Keith Ellison today led a bipartisan coalition of 30 state Attorneys General requesting that U.S. Department of Education Secretary Betsy DeVos exercise her authority to extend the closed school discharge timeframe for students who were enrolled in schools operated by the Dream Center Education Holdings, LLC (DCEH). This is important because it appears that many students may have otherwise lost their chance for loan forgiveness even if they qualified for closed school discharge of their student debt. The letter from the Attorneys General 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.

Read the full letter here.

In Oregon, DCEH operated The Art Institute of Portland, which closed its operations in 2018. For several years, Argosy online and Ai online also enrolled Oregon students, even though they did not have state authorization, in violation of Oregon law.

“Dream Center played fast and loose with the rules. When its mismanagement led it to close schools, it failed students yet again by not giving them accurate information on their rights and when their schools would actually close. This likely cost many students their eligibility for closed school discharge,” said Attorney General Rosenblum. “With the stroke of a pen, Secretary DeVos has the ability to help out these students, and we hope she will act quickly. To the students who are riddled with worry and fear about how to pay for this unnecessary debt: We won’t stop fighting for you.”

The Attorneys General 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 closed school discharge, 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 the 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.

The letter was led by the Attorneys General of Oregon and Minnesota, and co-signed by the Attorneys General of California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington and Wisconsin.

The Oregon Department of Justice (DOJ) is led by Attorney General Ellen Rosenblum, and serves as the state’s law firm. The Oregon DOJ advocates for and protects all Oregonians, especially the most vulnerable, such as children and seniors.