Business

Two for-profit colleges settle lawsuit with attorney general for $2.3 million

Kaplan Career Institute and Lincoln Technical Institute will pay hundreds of their former students $2.3 million after being accused of using unfair recruiting tactics and inflating job placement numbers, Attorney General Maura Healey said Thursday.

Many of the students who graduate from for-profit schools end up without a job and burdened with debt.

“We allege these for-profit schools lured hopeful students into enrolling in their vocational programs by promising certain careers, but only left them with substantial debt,” Healey said. “Students trying to better their lives through education are instead being left financially ruined. These settlements will provide the relief these students deserve and prevent deceptive practices that put taxpayer dollars at risk.”

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The two schools allegedly falsely reported that the job placement rates for their vocational programs were in excess of 70 percent.

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Kaplan Higher Education, LLC, which owned Kaplan Career Institute schools in Massachusetts, will pay eligible graduates of its medical vocational programs a total of $1.375 million, possibly paying off the students’ federal student loan debt. The attorney general’s office had investigated the Kaplan Career Institute campus in Boston’s Kenmore Square for about four years.

“Kaplan emphatically maintains that its actions were compliant and in the best interests of students, who were well-served by the institution,” the company stated in a release, adding that its graduates found jobs in places like Boston Children’s Hospital, Brigham and Woman’s Hospital, Boston Medical Center, and Harvard Vanguard. The statement emphasized that Kaplan has not been found of any wrongdoing but agreed on the settlement because of litigation costs. The business maintains that its actions follow accreditor’s rules and that it has received high student satisfaction ratings.

The attorney general’s investigation into roughly a dozen schools found that Kaplan’s job listings were from publicly available resources and that the school did not offer any independent services or programs for its students’ job searches.

The company closed the school and does not operate any Kaplan schools in the state anymore.

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Lincoln Educational Services, Inc., the owner of Lincoln Technical Institute, will pay eligible graduates of its criminal justice program in Somerville and Lowell $850,000 and will forgive $165,000 worth of private student loans. The attorney general’s office found that students were not able to find work in law enforcement and private security, and the school included unrelated jobs, such as general retail positions, in its placement data.

The school also allegedly told recruiters to “establish unhappiness, create urgency,” and “bring out the pain” to pressure prospective students to attend the school instead of military or community college. The for-profit school instructed recruiters to contact students at least seven times within the first three days to convince them to enroll.

In a statement, Lincoln Educational Services said that the attorney general’s investigation began during the recession in 2008, a time in which employment opportunities were limited for all graduates. Also, the statement said, for-profit schools are held to higher standards than other traditional universities: graduates who work less than 32 hours per week, who don’t work in their chosen field of study, or who work in a temporary agency are not considered valid placements. Graduates who do not respond or disclose their current employment, or who are continuing their education at a four-year university are considered unemployed.

“Full disclosure and transparency require a level playing field,” the statement said. “We look forward to the day that all post-secondary institutions ... are held to the same standards.”

In April, the attorney general led a multistate campaign to persuade the US Department of Education to relieve the debt of thousands of students who have been harmed by for-profit schools that violate state law.

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Her office is also in the middle of a lawsuit with for-profit schools Corinthian Colleges and American Career Institute for allegedly deceptive practices. The attorney general has successful won lawsuits against Sullivan & Cogliano, a Brockton for-profit school, for misleading advertising and inflated job placement rates and Salter College for misleading enrollment techniques and job placement numbers.

Karishma Mehrotra can be reached at karishma.mehrotra@globe.com. Follow her on Twitter @missmishma.