Education Management Corp. Settles with City of San Francisco

The Education Management Corporation has agreed to pay $4.4 million to resolve an investigation by the City of San Francisco into student recruiting and indebtedness, including recruiting practices and job placement reporting, among other issues, at eight of the company's Art Institute campuses across the state, according to a document filed on Tuesday with the U.S. Securities and Exchange Commission.

Under an agreement described in the filing, without admitting liability, the for-profit higher education company will pay $1.95 million to the city to cover the cost of the investigation; $1.6 million to set up a fund for students who enrolled in an Art Institute program but did not receive a diploma or degree; and $850,000 for "an unrestricted scholarship program for students attending one of the California Art Institutes." The company will also have to satisfy a litany of other requirements, which mostly consist of various disclosures.

San Francisco notified the company of the investigation in December 2011, reported The Chronicle of Higher Education. The company is among those facing increased scrutiny of late from lawmakers and regulators over their recruitment and lending practices, among other issues.


Related Links

U.S. Securities and Exchange Commission Filing

The Chronicle of Higher Education