The largest Pa. for-profit school’s closure left 1,510 students without diplomas. Now the AG wants answers. | Debt Valley

The Pennsylvania attorney general is investigating the shuttering this month of five Brightwood Career Institute schools across the state, which stranded 1,510 students without classes or diplomas.

Brightwood Career, with two campuses in Philadelphia, as well as in Broomall, Harrisburg, and Pittsburgh, represents the largest for-profit school closing in Pennsylvania, the state agency said. Other for-profit closures include ITT Tech in 2016, with 1,252 students in Pennsylvania, and the Art Institute of Philadelphia this summer with 400 students.

Attorney General Josh Shapiro said this week that so far 30 Brightwood students have contacted his office.

“We opened up an investigation,” Shapiro said in an interview, in which he encouraged more students to call or email his office. “It’s deeply troubling. These are people who paid out-of-pocket or took out loans for school and may not receive a degree.”

Brightwood students nationwide owe millions of dollars in student loans, and much of it may not be forgiven. Former students also will hold degrees from an institution that no longer exists, while current students will have to transfer to another school to finish their degrees in computers and electrical and medical fields.

Brightwood, owned by the Education Corp. of America in Birmingham, Ala., with 20,000 students nationwide, did not respond for comment. The company said on its website about whether it would pay licensing or certificate exams: “ECA has gone out of business and therefore has no funds with which to pay for certification or licensure exams."

“This is not the outcome that we envisioned and is one that we recognize will have a dramatic effect on our students, employees and many partners,” said Diane Worthington, a spokesperson for Education Corp. of America (ECA), in a statement about the closing last week.

Several employees sued ECA in Delaware last week for closing and laying them off without proper notice. “We hope to recover 60 days wages and benefits for the employees as required" by law, said attorney Charles A. Ercole of Klehr Harrison Harvey Branzburg in Philadelphia in a statement.

Brightwood’s closing has been attributed to regulatory pressures and dwindling enrollment. In October, the company sued the U.S. Education Department seeking to maintain its federal funding, which was jeopardized by its poor finances. A judge later dismissed the suit. Court documents filed by the company maintained that ECA owed $66 million at the time, and that its lagging revenue left it unable to make payments on its debt or rental fees, and that it faced eviction at several campuses, the Chicago Tribune reported.

The five-year national default rate for Brightwood borrowers was 31.5 percent in 2016, according to an Inquirer analysis of Department of Education data for the five years ending in 2016. The Pennsylvania loan default rate was even higher, hitting 38 percent, according to the analysis.

The nonprofit Center for American Progress obtained the data on student default rates for more than 4,000 for-profit and nonprofit institutions through a Freedom of Information Act request earlier this year and posted it online.

An associate’s degree in computer networking technology would have cost $33,000 in tuition and fees at the Philadelphia Mills campus, Brightwood’s website indicates.

U.S. students at for-profit and nonprofit colleges such as Pennsylvania State University or Temple now owe $1.5 trillion, or more than the debt on credit cards, home-equity lines, or auto loans.

“Students at for-profit schools are defaulting at roughly double the rate of nonprofits,” Eli Dvorkin, editorial director and co-author of Deeper In Debt: For-Profit Colleges Driving Loan Defaults from the nonprofit Center for an Urban Future, said on Wednesday.

“This is harming the very students who are struggling the hardest to get ahead,” he added.

For-profit technical institutes and colleges are closing because of state or federal enforcement action, financial mismanagement, or shrinking enrollment, Dvorkin said. For-profit enrollment soared after the Great Recession a decade ago when the jobless rate climbed.

The attorney general’s hotline is 1-800-441-2555 or students can email scams@attorneygeneral.gov. There also are complaint forms available online at: www.attorneygeneral.gov.

If you took out loans to attend Brightwood, you may be able to apply for a closed school loan discharge -- but there’s no guarantee.

Start by contacting the Department of Education. For more information, visit the website: https://studentaid.ed.gov/sa/sites/default/files/education-corporation-america.pdf.

Then contact your student loan servicer. To find out your loan servicer, log in to “My Federal Student Aid” at StudentAid.gov/login or call 1-800-4-FED-AID (1-800-433-3243; TTY for the hearing impaired 1-800-730-8913).

Complete and return the closed school loan discharge application sent by your loan servicer or complete the closed school loan discharge application at StudentAid.gov/closedschoolform and return it to the loan servicer. Students must send Closed School Loan Discharge Applications to federal student loan servicers.

Students are supposed to continue to make payments on loans while discharge applications are being processed. If students do not meet the criteria for a loan discharge, they will be informed by loan servicers and will need to continue making payments.

Visit StudentAid.gov/closedschool for additional information about closed school loan discharges.

If you’re a student at Brightwood wanting to transfer your credits, the school’s owner, Education Corp. of America, set up a website with some information:

Currently, ECA recommends transferring to a list of schools in Pennsylvania that include Fortis Colleges & Institutes, Lincoln College of Technology, Pittsburgh Technical, and Triangle Technical. Or go online: www.ecacolleges.com/transfers. But it’s unclear whether ECA owns those schools as well.