Relief on the way for defrauded students at MN School of Business, Globe U

Former students of the Minnesota School of Business and Globe University who took out federal loans or attended the disgraced colleges' criminal justice program are now receiving financial relief.

The Minnesota Attorney General's Office on Thursday announced $23.6 million in federal student loan forgiveness and an additional $15.6 million in restitution for about 3,000 former students who were issued illegal loans and 920 former students who were enrolled in the colleges' fraudulent criminal justice program.

The payments are part of an agreement that resolves a lawsuit the state of Minnesota filed against the schools in 2014 alleging consumer fraud and illegal lending practices. After a settlement was reached in March, the U.S. Department of Education and a federal bankruptcy court approved the payments, which began Thursday.

Attorney General Keith Ellison said in a news release that he was "heartbroken" for students who attended the schools' criminal justice programs because they wasted their time and money and they faced crippling debt.

"Starting today, money will finally get back in the pockets of students who were defrauded by MSB's and Globe's false claims and charged illegal rates of interest," he said. "I am glad everyone affected will finally get some closure and a measure of justice."

The news follows multiple court battles involving two trials, several appeals and bankruptcy filings by the schools. All Minnesota School for Business and Globe University locations closed in the state, Wisconsin and South Dakota by 2017.

A Hennepin County district judge concluded in 2016 that the schools committed consumer fraud in telling students they could pursue careers as police or probation officers by enrolling in criminal justice degree programs that cost $40,000 to $80,000. The programs did not provide the education needed to pursue those careers.

The schools issued partial refunds totaling $3.7 million in 2018 before delaying further repayments when they filed for bankruptcy.

Students who enrolled in the schools' criminal justice programs from 2009 to 2016 and who submitted claims for relief will receive federal student loan forgiveness.

Eligible students also will be reimbursed for almost the full cost of what they paid to attend the programs and for payments on federal student loans. Restitution also will be given to students who obtained illegal loans through the schools with interest rates as high as 18%.

Claimants will receive notice from the U.S. Department of Education regarding the loans.

The Attorney General's Office is also seeking federal loan forgiveness for students who attended another for-profit university, ITT Technical Institute, which shut down in 2016. Ellison obtained $2.6 million in private debt relief for those students in settlements in 2019 and 2020, according to his news release. He is also pursuing expanded debt relief for students who took out loans to attend Argosy University, another for-profit school.