In recent years, the Education Management Corporation (EDMC) has been at the center of controversy due to its for-profit college operations. However, in October 2015, the company reached a settlement agreement with the government that promises to reform its business practices.
The EDMC settlement agreement stems from a lawsuit filed by the Department of Justice in 2011, which alleged that the company had violated federal law by paying recruiters based on the number of students they enrolled. This payment structure encouraged recruiters to enroll as many students as possible, regardless of their ability to succeed in college.
In addition, the government alleged that EDMC had falsely certified compliance with federal regulations in order to receive Title IV funding, which provides financial aid to students. The lawsuit alleged that the company had misled students about the quality of its programs and its job placement rates.
Under the terms of the settlement agreement, EDMC agreed to pay $95.5 million to settle the lawsuit. In addition, the company agreed to extensive reforms, including the elimination of the pay-for-enrollment compensation structure and the hiring of an independent monitor to oversee compliance with federal regulations.
The settlement agreement also requires EDMC to provide additional disclosures to students about the costs and outcomes of its programs, including job placement rates and student loan repayment rates. The company must also provide students with a three-day window to cancel their enrollment without penalty.
Despite the significant financial and operational changes required by the settlement agreement, EDMC will be allowed to continue operating its for-profit colleges. However, the company will need to implement significant changes in order to comply with federal regulations and avoid future lawsuits.
The EDMC settlement agreement represents an important step in the regulation of for-profit colleges and the protection of students. While these schools can provide valuable educational opportunities to students, they must operate in a responsible and ethical manner. This settlement agreement sends a message to other for-profit colleges that they will be held accountable for their actions and must comply with federal regulations.