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February 28, 2022

ATTORNEY GENERAL RAOUL ANNOUNCES NEARLY $2.1 MILLION IN PRIVATE DEBT RELIEF FOR FORMER ARGOSY UNIVERSITY STUDENTS

Entities Controlling Argosy Student Debt Agree to Cancel Private Debt; Includes Nearly $90,000 in Relief for Illinois Students; Bars Further Collection and Negative Credit Reporting

Chicago  — Attorney General Kwame Raoul today announced a bipartisan agreement that cancels nearly $2.1 million in “institutional debt,” or outstanding principal and interest, taken out by students who attended Argosy University before the school’s abrupt closure in 2019. The agreement with the current owners of students’ debt includes nearly $90,000 in relief for Illinois students who attended Argosy’s Chicago and Schaumburg campuses, as well as those who took classes online. The agreement also prevents further collection and negative credit reporting against impacted students.

“Students of Argosy University, through no fault of their own, have been left with debt and even negative credit ratings – but not the degrees they were promised,” Raoul said. “I am pleased with this agreement that provides some relief to those students and holds Argosy accountable to the students abandoned when the school abruptly closed.”

In the agreement, Attorney General Raoul alleged that when Dream Center Education Holdings purchased Argosy in 2017, it falsely marketed the school to prospective students as a “nonprofit” institution. The Attorney General also alleged that the owners misled students about their ability to obtain degrees, and provided misleading and incomplete information leading up to the school’s ultimate closure. In addition, Argosy allegedly issued so-called “institutional loan debt” to students who were enrolled based on those misleading marketing and recruitment practices.

Mismanagement by Dream Center ultimately led to insolvency and the closure of Argosy schools nationwide in 2019. Argosy ended up entering federal receivership, a process similar to bankruptcy that can limit the financial relief available to students and other aggrieved creditors. Once in receivership, ownership of the institutional student debt changed hands, but Attorney General Raoul and the multistate group were able to secure today’s agreement with the entities that now control the debt.

In March 2020, the Attorney General’s office entered a settlement with Dream Center which discharged over $2.15 million in institutional loans and refunded over $37,000 to Illinois borrowers who attended the Illinois Institute of Art and were deceived with respect to accreditation status.

The Illinois Attorney General’s office has long been a national leader in investigating and enforcing consumer protection violations in the higher education field. Raoul’s office has discharged more than $14 million in other fraudulent private student loans since 2019. Earlier this year, Raoul’s office announced a $1.85 billion national settlement with Navient that includes nearly $5 million in restitution payments and more than $133 million in debt cancelation for Illinois borrowers. In addition, Illinois will receive a direct payment of more than $7 million.

In November 2019, Attorney General Raoul announced that more than $10 million in student loans for former Illinois Institute of Art and Colorado Art Institute students would be discharged by the Department of Education following an application by Colorado and Illinois under the 2016 Borrower Defense to Repayment Rule. Attorney General Raoul’s office also recently worked to pass “Know Before You Owe,” initiated by Raoul to alert borrowers of their remaining federal student loan eligibility to help them steer clear of predatory private loans like those provided by Argosy. Raoul has also overseen the rollout of the state’s first Student Loan Ombudsman, a position created by the Student Loan Servicing Rights Act, to provide resources for student borrowers who are struggling to make student loan payments.

Joining Attorney General Raoul in the settlement were the attorneys general of Arizona, Colorado, Florida, Georgia, Hawaii, Minnesota, Tennessee, Utah, and Virginia. The agreement will be filed in the Ohio federal court overseeing the receivership.

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