Some former students of the now-defunct Spencerian College will not have to worry about paying back student loans thanks to a $1.7 million settlement announced by Kentucky Attorney General Andy Beshear on Friday.
The settlement will help nearly 700 students who took Career Education Fund loans to attend Spencerian from Jan 1, 2007 through Dec 31, 2011. It does not affect students who took federal loans controlled by the U.S. Department of Education.
In a statement, Besehar thanked thanked Sullivan University, which owned Spencerian, for agreeing to the terms.
“My office is pleased that Sullivan has agreed to resolve this matter by forgiving nearly $2 million in student loans and agreeing to help repair their credit and dismiss any collection lawsuits against these students,” Beshear said in the news release.
“At a time when our young Kentuckians face unprecedented student debt, I am pleased we Spencerian College secured them real relief.”
Spencerian was a for-profit college with campuses in Louisville and Lexington until a merger with Sullivan University last June prompted it to close its Lexington campus and stop enrolling students.
Former Attorney General Jack Conway filed a lawsuit against Spencerian in 2013, alleging the school misrepresented the graduate employment success of its students in advertisements.
As part of the settlement, Sullivan will also direct credit-reporting agencies to remove negative information about students with CEF loans for Spencerian. Collection lawsuits for defaulted CEF loans will also be dismissed.
In recent years, Beshear has also settled lawsuits against for-profit colleges Corinthian Colleges, American National University and Daymar University over deceptive marketing practices.