Cities Journal

EDMC Settles To Pay $95.5 Million


EDMC has traditionally been one of the largest for-profit higher education companies in the United States, managing four high education brands – Argosy University, South University, Brown Mackie College and the Art Institutes, all over the country. Today, we are learning that they have reached a settlement with the federal government, agreeing to pay $95.5 million.

The lawsuit dates all the way back to 2007, when former EDMC employees went into whistleblower mode, saying that the company had been handing out pay according to how many students their employees brought to the company. Of course, this resulted in over-recruitment of students (often involving made-up job prospect numbers) and burdening them with student loans that they would never be able to repay. This amounted to breaking the federal law.

This is not the only case as there was another one with 39 states and the District of Columbia who will also be getting $100 million from the company in order to cover the unpaid student loans. In layman’s terms, the cases were never in question. The proof was there, the testimonials were there. EDMC was clearly guilty. So why such a low settlement, considering that the federal case alone involved figures in excess of $11 billion?

The reason is simple – EDMC does not have the money. Enrollment has dropped dramatically over the last decade and U.S. Attorney General Loretta Lynch said that it was important to factor in their current financial position so that they did not go bankrupt which would have benefited no one.

In essence, the federal government got the most it could out of EDMC, but somehow there is a feeling that it is just not enough. Especially since the settlement means they do not have to admit to any wrongdoing.

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