N.Y. AG announces $10.25 million settlement with for-profit education company

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $10.25 million settlement Monday with a for-profit education company that allegedly inflated its graduates' job placement rates to attract more students.

The Illinois-based Career Education Corporation allegedly significantly inflated its job placement rates from at least 2009 through spring 2011 and used the data to entice prospective students into attending its schools. CEC operates seven career-focused schools in New York and multiple online schools. The company currently enrolls 75,000 students around the world.

"Students pay thousands of dollars to for-profit colleges because they rightly believe education is the ticket to success in their careers," Schneiderman said. "That's why it's so unfortunate that this company exploited students' aspirations and published misleading information. Students deserve - and the law requires - accurate data when schools publish it for prospective students."

CEC employees allegedly used multiple improper methods to inflate the company's placement rates, including counting graduates' employment at single one-day health fairs and mischaracterizing graduates' job duties to improperly count the students as employed in the field in which he or she trained. Students invested thousands of dollars and months or years of study in CEC's programs because they were confident the programs would result in job opportunities in their chosen field.

For the school years 2008-2009 and 2009-2010, CEC disclosed annual placement rates for its campuses in New York of between 54.9 percent and 80.2 percent. The actual placement rates ranged from 24.1 percent to 64.1 percent.

Under the terms of the agreement, CEC must pay $9.25 million to compensate students who graduated from New York campuses or New Yorkers who graduated from the online programs, pay $1 million to the state as a penalty, implement stringent rules for disclosing and calculating job placement rates, hire an independent company to verify all placement rates for a three-year period, provide adequate placement assistance services to students to help them find jobs after graduation, only offer programs that are accredited and provide disclosures concerning the accreditation status of its programs and the lack of transferability of credits from CEC schools to most other schools.