It only took 10 years. Late yesterday, we agreed to settle our consumer fraud class action against Western Culinary Institute, Le Cordon Bleu-Portland, and Career Education Corp.
Under the settlement, class members will get refunds of 44 percent of the amounts that they paid for tuition, books, and fees. The 44 percent is reduced for class members who owe money directly to the school. (That reduction does NOT apply to student loans; it’s only if you owed money directly to the school.) The settlement must be approved by the court, so it is not a done deal, and we still have far to go.
There are some other features to the settlement. About $1 million in debts owed by students back to the school will be wiped clean. The defendants will pay attorney fees on top of the refund amounts. The Court will decide how much in attorney fees we will receive.
There is one other feature that is kind of a big deal. In the world of student loans, a borrower can defend against a collection action by raising the fraud of the school. Under the settlement, class members can still litigate the fraud of the school as a defense to loans. Also, they can use the information that we gathered over the last 10 years to help defend against collection actions. It is possible that former students could have their loan balances wiped away.
The student loan wipe-away is something that class members will have to undertake on their own–Sallie Mae and Navient were not parties to this case. Class members who want to pursue that option will need to hire their own student-loan defense lawyers. If you’re in Oregon, Washington, or Idaho, we can provide a reference.
So if you’ve read this far, you probably want to know how much and when. If all goes well, payment would be sometime this summer. But it could be delayed. As far as how much, it’s simply math. If you paid $40,000 toward an associates degree–many paid more–and you don’t owe money back to the school, your 44 percent refund would pay back $17,600.
To get the money, you will need to file a claim. Claim forms should be going out in March. Once the claim period starts, you will have 90 days to file your claim. If you don’t file it by then, you lose your right to make a claim, and Career Education Corp. gets to keep the money. We don’t want that to happen! So we’ll be working with you to make sure that you get your claim filed.
Also, this settlement doesn’t apply to those who have to go to arbitration. If you’re in the arbitration group, we can continue to help you, but you have to help us help you. We are pursuing refunds for the arbitration group and will do whatever is necessary to achieve a recovery. If you’re a member of the arbitration group and haven’t done so, please sign up through our portal. There are deadlines for filing for arbitration. If you don’t take action, your rights will be lost.
So that’s the story. We’re pleased with our progress and this development. And of course, we will continue forward.