Some For-Profit College Students in Virginia Won't have to Pay Back Loans

Nov 17, 2015

About 2,000 college students in Virginia won’t have to pay back some of their student loans, thanks to a state settlement with the Education Management Corporation. That company owns a handful of for-profit colleges in Virginia that have been under investigation for lying to students about job placement rates and graduates’ salaries. 

South University is located in a strip mall in Short Pump, a suburb of Richmond. It’s one of a handful of colleges owned by the company that just settled with the state. Others include the Art Institutes in Northern Virginia and Virginia Beach, and Argosy University in Northern Virginia.

South University's Short Pump location.

The company has been investigated since 2007 for aggressive recruitment practices. Michael Kelly is with the state attorney general’s office.

“The school painted too rosy of a picture, undersold the cost, oversold the benefits and students were relying on that information when making a decision about whether or not to enroll,” says Kelly.

For-profit schools tend to target working adults, who often enroll but fail to graduate, leaving them with debt but no degree. The company, and the colleges it owns, won’t be shutting down, but have agreed to change how they recruit.

“One of the things they’ve agreed to do, is record online chats and phone calls with prospective students so they can be analyzed to make sure recruiters are complying with the terms of the agreement," says Kelly.

For those eligible for loan forgiveness, debt they owe to the school will be erased. But all students are still on the hook for loans from the federal government, which make up 90-percent of the company’s profits.