Kentucky Attorney General Jack Conway's office has entered into an agreement with Mid-Continent University to restore loans to former students. The now-closed school must offer loans matching the terms and conditions of federal loans for balances remaining from 2011 to 2014. The school must also offer balance discharges or loan forgiveness to qualified students.
Conway's office says MCU violated state consumer protection laws by failing to disclose to students that they would not be able to receive federal aid to pay their education costs and instead offered private institutional loans instead of federal loans. By doing so, the OAG alleges that MCU deprived students of the protections and benefits of federal student loans.
"MCU violated the law by failing to inform students that they would not be eligible for federal loans to pay tuition at MCU. This left students with private loans, which generally have fewer consumer protections. The AVC [Assurance of Voluntary Compliance] seeks to restore students' rights to what they would have been had students received the expected federal loans," Conway says.
MCU must offer a discharge of any portion of a remaining balance or loan for which a student anticipated receiving federal loans if the student was enrolled at the school at the time it closed in June 2014 and has not completed their education at MCU or another institution through a teach-out program or by transferring credits. Other students eligible for discharge would include those who withdrew within 120 days of closure and haven't completed their programs at another institution. Students who did not transfer credits to another institution may quality for a discharge of their outstanding federal loans by applying to the Department of Education and should seek guidance from their loan servicers.
Former MCU students affected by this settlement should receive a letter within a week. The letter is expected to include details about the student's balance, repayment options and how to apply for a discharge if eligible.
MCU denies wrongdoing or violation of the law, but voluntarily entered into compliance to resolve the allegations.
A month ago, WKMS reported that the university board intends to put the 17-acre Mayfield property up for sale. MCU's Vice President of Finance and Administration Tim Walker said the school hopes to secure future mortgage payments by collecting more than $13 million in outstanding tuition and fees.
MCU closed in June 2014 after being plagued by financial and accreditation issues.
