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Stein to DeVos: Help Students Burdened with Unfair Student Debt

For Immediate Release:
Thursday, October 17, 2019

(RALEIGH) Attorney General Josh Stein today urged U.S. Department of Education Secretary Betsy DeVos to exercise her authority so students who were enrolled in schools that abruptly closed can obtain relief for their student debts. Attorney General Stein and 29 other attorneys general are asking Secretary DeVos to extend the closed school discharge (CSD) timeframe so students enrolled in schools operated by Dream Center Education Holdings LLC will be eligible for student debt relief.

“Dream Center failed to give students the information they needed to make decisions about their educational and financial future when their schools abruptly closed,” said Attorney General Josh Stein. “These students should not be on the hook for student debt caused by corporate mismanagement. Secretary DeVos can give these students a fresh start – I urge her to do so.”

In July 2018, Dream Center abruptly announced that it would be closing all of its North Carolina schools – the Art Institutes of Charlotte and Raleigh-Durham, and South University in High Point. Attorney General Stein wrote to Dream Center after its initial closing announcement asking for clear next steps on behalf of its students, but Dream Center failed to announce a firm closure date for months and did not provide adequate information on the CSD option to students. Many students were forced to make decisions about their education and financial future without integral information about their school’s closing date and student debt forgiveness options.

The letter details Dream Center’s extraordinary misconduct and mismanagement of its schools, and numerous violations of federal and state law, which prevented students from obtaining degrees and unfairly left them to repay federal student loan debt from their time attending the failed schools. The attorneys general state that a “wide variety of regulators, including the U.S. Department of Education have found that Dream Center 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.” Attorney General Stein is again appealing to Secretary DeVos to help Dream Center students after his office separately wrote the Department twice last year to alert it to Dream Center’s mismanagement of the schools’ closure.

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.

Attorney General Stein is joined in sending this letter 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, Pennsylvania, Rhode Island, South Dakota, Tennessee, Vermont, Virginia, Washington and Wisconsin.

A copy of the letter is available here.

Laura Brewer (919) 716-6484