Office of the Attorney General
Attorney General Conway Announces Agreement with Mid-Continent University to Restore Students' Rights

Press Release Date:  Monday, July 13, 2015  
Contact Information:  Allison Martin
Communications Director
502-696-5651
 


Attorney General Jack Conway today announced that his Office of Consumer Protection entered into an Assurance of Voluntary Compliance (AVC) with Mid-Continent University (MCU) to restore the rights of former students to what they would have been had they received expected federal financial aid. The AVC resolves the Office of the Attorney General's (OAG) allegations that between 2011 and 2014, MCU violated state consumer protection laws by failing to disclose to students that they would not be able to receive federal aid to pay their education costs at MCU. The school instead offered or signed students up for private institutional loans instead of federal loans. By doing so, the OAG alleged that MCU deprived students of the protections and benefits of federal student loans. The Attorney General's Office asserted that MCU's conduct constituted unfair, false, misleading or deceptive acts or practices in violation of Kentucky consumer protection laws.

"MCU violated the law by failing to inform students that they would not be eligible for federal loans to pay tuition at MCU," said Attorney General Conway. "This left students with private loans, which generally have fewer consumer protections. The AVC seeks to restore students' rights to what they would have been had students received the expected federal loans."

The AVC requires that MCU must offer students loans matching the terms and conditions of federal student loans for all remaining balances of MCU students who applied for and qualified for, but did not receive, federal loans for the 2011-2012, 2012-2013, and/or 2013-2014 award years. These matching loans must include all the benefits and protections of Federal Direct Loans, including but not limited to:

• A six-month repayment grace period beginning the day after students cease to be enrolled at least half-time in school.
• Deferment of loan payments with no interest accrual while in school or during temporary periods of unemployment, economic hardship, or military service.
• Forbearance of loan payments with accrual of interest under certain economic or other conditions.
• Choice of various repayment plans, including income-based plans with reduced payments.
• Teacher and public service loan forgiveness.

MCU must also offer balance discharges or loan forgiveness to students who would have qualified for a federal closed school discharge of their federal loans. Upon application, MCU must offer a discharge of any portion of an MCU balance or loan for which a student anticipated receiving a federal loan if the student was enrolled at the school or on approved absence from the school at the time it closed on June 30, 2014 and has not completed his or her educational program at MCU or another institution through a teach-out program or by transferring credits earned at MCU to another school. Other students eligible for the closed school discharge would include those who withdrew from MCU within 120 days of its closure and have not completed their programs with MCU or another institution.

Students should be aware that if their MCU balance or loan is discharged, their transcripts will include a notation that the credits they earned at MCU will only be available for transfer to another institution if the discharge is reversed and the discharged loan is returned to repayment status.

Former MCU students who choose not to transfer their credits to another institution should also understand that if they meet the requirements outlined above, they may qualify for a closed school discharge of their outstanding federal loans by applying to the Department of Education. For further information about this option, former MCU students should contact their loan servicers.

Former MCU students affected by the settlement should expect to receive a letter from MCU within approximately one week. That letter will include a copy of the AVC and information about a student's balance, repayment options, and how to apply for a discharge if eligible. Please review your packet of information and the AVC for further details on how to dispute any determination by MCU affecting your rights under the AVC.

For further information, you may e-mail the Office of the Attorney General at mcu3@ky.gov. You may also call 855-813-6507 for more information. You may also mail the Office of Consumer Protection, 1024 Capital Center Drive, Frankfort, KY 40601.

MCU denies any wrongdoing or violation of law, but voluntarily entered into the AVC to resolve the allegations. A copy of the AVC may be found at http://goo.gl/uDRcOR.