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Colorado students at private career school that lost accreditation get federal loan relief

A CollegeAmerica sign is displayed on a window outside their location in Fort Collins, Colorado
Mead Gruver
A CollegeAmerica sign is displayed on a window outside their location in Fort Collins, Colo., Tuesday, July 25, 2023. Federal and Colorado officials announced Tuesday that Colorado students who attended the career school, which lost accreditation and closed in 2021, will have their federal student loans refunded and remaining balances forgiven. (AP Photo/Mead Gruver)

The federal government will forgive loans for thousands of Colorado students who attended a private career school that lost accreditation and advertised with misleading data on alumni job placement and earnings that was more rosy than realistic, federal and state officials announced Tuesday.

CollegeAmerica, owned by Salt Lake City-based Center for Excellence in Higher Education, Inc., had locations in Colorado and Arizona and offered associate degrees in business, computer technology and medical assisting, and bachelor's degrees in business and computer science. It closed in 2021.

In all, 7,400 former students enrolled at the three CollegeAmerica locations in Colorado between Jan. 1, 2006, and July 1, 2020, will have their federal student loans refunded and remaining balances forgiven after the school overstated — sometimes by double — the salaries that graduates could earn, Colorado Attorney General Phil Weiser said in a news conference.

"They basically tried to get people to sign up for degree programs that they knew weren't going to deliver the results that they were promising. The internal data they had showed that students weren't making this money, they didn't get these jobs and they actually weren't even getting the training they were promised," Weiser said.

Phone and email messages seeking comment from the parent company weren't immediately returned Tuesday.

The federal student loan relief will total $130 million, according to the U.S. Department of Education. The relief won't apply to nonfederal loans and doesn't involve President Joe Biden's $400 billion plan to forgive student loans for millions of Americans, which the U.S. Supreme Court effectively killed with a ruling in June.

To have their loans forgiven, former students don't need to take any action, Federal Student Aid Chief Richard Cordray said in the news conference.

The Department of Education, Cordray said, verified Colorado attorney general's office findings from a decade of investigating the private career school. The school promised higher salaries than were realistic and knew that graduate job placement wasn't the 70% advertised but more like 40%, Cordray said.

"These are only two of the substantial misrepresentations CollegeAmerica made," Cordray said.

In 2021, Center for Excellence in Higher Education, Inc., schools including CollegeAmerica lost their accreditation and soon after, stopped enrolling students. Accrediting Commission of Career Schools and Colleges is a nonprofit that evaluates private post-secondary schools, and grants the national accreditation necessary for such schools to receive federal funds.

Opponents of federal funding for proprietary schools — which often prioritize owner and shareholder interests over those of students — try to associate "for profit" with "predatory" in the public mind, according to a $500 million federal claims court lawsuit filed in December by Center for Excellence in Higher Education, Inc. against the Department of Education.

"This class of professional critics moves seamlessly between government service, think tanks, and private entities and believes that the profit motive is inherently incompatible with higher education," the lawsuit states.

The Center for Excellence in Higher Education had four branches that are now closed: Stevens-Henager College, in Idaho; California College San Diego; CollegeAmerica Denver and CollegeAmerica Arizona.

CollegeAmerica Denver had locations in Denver, Fort Collins and Colorado Springs; CollegeAmerica Arizona's schools were in Flagstaff and Phoenix. A CollegeAmerica location in Cheyenne closed in 2017.

Total tuition costs at CollegeAmerica ranged from around $40,000 to complete an associate degree to $75,000 to earn a bachelor's, according to school catalogs online.