Kentucky University allegedly signed qualified students up for private loans, not federal

By Shaun Zinck | Jul 16, 2015

Kentucky Attorney General Jack Conway said Monday his office had reached an agreement with Mid-Continent University that resolves allegations that the university violated state laws when it failed to let some students know they wouldn't receive federal ai   Mid-Continent University

FRANKFORT, Ky. (Legal Newsline) - A Kentucky university agreed to a settlement with the state's attorney general's office to resolve allegations that the university failed to let students know they could receive federal student aid, said Kentucky Attorney General Jack Conway on Monday.

The Attorney General's Office of Consumer Protection alleged that between 2011 and 2014 Mid-Continent University offered or signed students up for private loans rather than federal loans. The private loans didn't have the same benefits or protections that come with student loans.

The Assurance of Voluntary Compliance between Mid-Continent and Conway's office returns some rights to those students, Conway said.

"MCU violated the law by failing to inform students that they would not be eligible for federal loans to pay tuition at MCU," Conway said. "This left students with private loans, which generally have fewer consumer protections. The AVC seeks to restore students' rights to what they would have been had students received the expected federal loans."

Under the agreement, Mid-Continent will match all the terms and conditions of federal student loans for remaining balances of students for the 2011-12, 2012-13 and 2013-14 school years. The students must have applied and qualified for the federal loans but did not receive the loans.

Some of the terms include a six-month repayment grace period beginning the day after a student isn't enrolled in at least halftime in school; deferment of loan payments with no interest during periods of unemployment, economic hardship or military service; offer income-based plans and other repayment plans; forbearance of loan payments with interest accrual; and public service and teacher loan forgiveness.

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