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Diving overview:
- A shuttered for-profit college corporation will pay $28 million to settle allegations it left students in the lurch after it abruptly closed.
- A lawsuit against the Education Corporation of America and its subsidiaries alleged that the coalition failed to provide students with a way to complete their education when its colleges were closed. The ECA closure also resulted in over $100 million student loan settlementsaid the suit.
- The settlement agreement was filed in December and finalized Monday, according to the plaintiff’s legal team. The money will be distributed among nearly 2,000 creditors and former students by John Kennedy, head of the ECA’s bankruptcy estate.
Diving statistics:
Before its closure, ECA operated several for-profit institutions across the country, including Brightwood College, Brightwood Career Institute and Virginia College. A company that is already in trouble shut down in 2018 after the Accreditation Council for Independent Colleges and Schools suspended the accreditation of its colleges. ACICS was much afflicted in itself and is on the way to shutdown until the beginning of 2024.
ECA knew in advance that its colleges were insolvent but did nothing to avoid their ultimately chaotic closures, the suit said. As a result, more than 20,000 students were left without a path to graduate.
US Department of Education pushed forward the ECA closure plan in time, when.
The only remaining college on the ECA list is the New England College of Business, which was independently accredited. NECB, now a subsidiary of Cambridge College in Massachusetts, is named as a defendant in the settlement.
The settlement also named three former ECA executives: former chairwoman Ava Stein, former chief financial officer Chris Boehm and former CEO Stuart Reed. Stein also co-founded Willis Stein & Partners, a private equity firm that served as ECA’s majority shareholder. Boehm served as a partner in the firm.
Michael Collyard, partner at law firm Robins Kaplan and co-leader of the case against ECA, called the settlement a “tremendous result”.
“Mr. Kennedy recovered $28 million for an estate that had essentially no assets other than his claims,” ​​Colyard said in an emailed statement.
