Pile of Cash.

Pile of cash. Photo: Romariolen/Shutterstock.com

An investigation led by eight states,the devil's fire mariam el-hafi including Connecticut and Pennsylvania, ended with a for-profit education company changing how it does business and entering a $493.7 million settlement.

The

settlement agreement

announced Thursday requires Illinois-based Career Education Corp. to change its enrollment practices and forgo collection of $493.7 million in debt owed by 179,529 students nationally.

The states leading the five-year investigation were Connecticut, Pennsylvania, Iowa, Illinois, Kentucky, Missouri and Oregon. Every other state, with the exception of New York and California, signed onto the settlement.

The investigation, the states said, was launched after complaints from students of predatory and deceptive practices. There was also a critical report on the for-profit education sector by the U.S. Senate's Health, Education, Labor and Pensions Committee. Career Education operates many brick-and-mortar schools across the country, including American InterContinental University, Colorado Technical University and Briarcliffe College.

Connecticut and Pennsylvania attorneys general applauded the settlement.

"For far too long, unscrupulous for-profit colleges have put money before people, engaged in deceptive recruiting practices, and left students with a burden of crushing debt while providing them with useless degrees that wouldn't lead them to gainful employment," outgoing Connecticut Attorney General George Jepsen said in a statement. "Today, we are holding Career Education Corp. responsible for the misrepresentations it made to these students. It is my hope that this debt relief will help ease the burden on students who were trying to better themselves, their careers and their livelihoods but were instead tricked into programs and degrees that were sometimes worthless."

About 1,415 Connecticut residents will get $6.8 million in student debt relief. In Pennsylvania, 12,600 students will have $38.6 million in education debt relieved and in New Jersey, some 6,400 eligible students will receive relief totaling about $19.6 million.

"The settlement I am announcing today ensures that thousands of Pennsylvanians who were misled and deceived by the false promises of this for-profit corporation will see their loan debt eliminated," said Pennsylvania Attorney General Josh Shapiro. "Students who pay tuition to attend these or any other college deserve a fair deal and an honest representation to them of what they're paying for. This corporation and its colleges failed to do that, and we're holding them accountable."

New Jersey Attorney General Gurbir Grewal said in a statement: "Career Education Corp. was among the companies that put its own profits ahead of its students' best interests. Today's settlement helps right that wrong by securing debt relief for thousands of New Jersey residents who attended Career Education Corp. schools."

The company referred the Connecticut Law Tribune to a statement on its website. That statement read: "The resolution of this open inquiry is an important milestone for the company that coincides with the completion last month of a multi-year process of teaching out and closing our transitional campuses.” Chief Executive Officer Todd Nelson said, “We have remained steadfast in our belief that we can work with the attorneys general to demonstrate the quality of our institutions and our commitment to students.”

The states found, according to Jepsen, that Career Education used emotionally charged language to pressure students into enrolling in CEC schools and deceived students about the total costs of enrollment. Admissions representatives were instructed to inform prospective students only about the cost per credit hour without disclosing the total number of required credit hours.

The agreement also calls on the company to, among other things, cease enrolling students in programs that do not lead to state licensure in professions that require licenses for employment. It also requires Career Education to establish a risk-free trial period for undergraduate students.

View comments