City Attorney’s unlitigated claim alleged that Art Institute of California-San Francisco underestimated program costs for its students, inflated job placement figures
SAN FRANCISCO (May 13, 2015) — City Attorney Dennis Herrera today launched an outreach program to identify and compensate eligible beneficiaries of his office’s settlement agreement with the Education Management Corporation, the parent company of Art Institute of California-San Francisco. Herrera’s unlitigated claim centered on allegations, largely informed by his office’s consumer protection investigation, that the for-profit college’s marketing tactics systematically underestimated AiCA-SF’s costs to students and inflated job placement figures for graduates.
Under terms of the settlement agreement, AiCA-SF agreed in June 2014 to resolve the dispute prior to litigation by paying $1.95 million to carry out the purposes of the agreement and to fully reimburse all public costs to investigate the case. The City Attorney’s Office will also administer a reimbursement program for Art Institute of California-San Francisco students who graduated between 2009 and 2012, and who were unable to secure a job placement relating to their field of study within six months of graduation. Eligible graduates who received bachelor’s degrees are expected to receive partial refunds of approximately $4,000 each; eligible graduates who received associate’s degrees should receive partial refunds of approximately $2,000. Precise amounts will depend on the total number of beneficiaries who can be located and enrolled as participants in the program before the June 30, 2015 deadline.
“For-profit colleges have come under fire for deceptive marketing, and when we found evidence of actionable practices victimizing San Franciscans, we moved aggressively to right the wrong,” Herrera said. “Half our motivation for pursuing this case was to hold Art Institute of California-San Francisco accountable for failing to accurately inform students about their education costs and job placement prospects, and achieve a change in practices that would prevent future students from being misled. The other half was to secure partial refunds as a measure of justice for those graduates who relied on overly rosy cost and job placement statistics, only to find that they couldn’t find a job in their field upon graduation. The outreach program we’re launching today makes good on the second half of our rationale for bringing this case, and we intend to work tirelessly alongside the independent claims administrator to identify and enroll as many eligible beneficiaries as possible. Finally, our original dispute notwithstanding, I want to credit Education Management Corporation for its industry leadership in working with us cooperatively and productively. They showed a commendable willingness to address concerns about their current and former students, and to improve their practices so they avoid problems like this moving forward.”
As part of the settlement, Education Management Corporation, or EDMC, agreed to endow a $1.6 million scholarship fund for non-graduating students seeking to complete their studies, and to offer another $850,000 in general scholarships. EDMC began offering scholarships for returning students several months ago, and is still in the process of implementing its unrestricted scholarship program. The agreement, formally an “Assurance of Voluntary Compliance” that is legally binding and enforceable, also includes key changes to Education Management Corporation’s marketing and reporting practices to avoid misleading prospective students in the future.
Herrera’s office is partnering on the AiCA-SF reimbursement program with Education Management Corporation itself and Heffler Claims Group, one of the nation’s leading independent settlement administrators. The process formally begins with the mailing of notice letters to those identified as AiCA-SF graduates who failed to gain employment in their fields of study within six months of graduating.
For potentially eligible AiCA-SF graduates who did not receive notice letters, the City Attorney’s Office provides online access to Applications for Refund, Change of Address forms, and answers to frequently asked questions at https://sfcityattorney.org/aicasf. It has also established points of contact to take questions and to offer guidance on the refund application process: by telephone at (415) 355-3268; or by email at firstname.lastname@example.org.
The deadline to submit an Application for Refund is Tuesday, June 30, 2015.