For-Profit Art Institutes of California Accused of Swindle

LOS ANGELES (CN) - The Art Institute of California misleads students into thinking that government loans can cover the cost of tuition at the for-profit college, then leaves them without a degree and saddled with debt, a class claims in Federal Court.

Lead plaintiff Chinea Washington says she pursued a bachelor's degree in interior design at the Art Institute of California, Hollywood, (AICH) after an admissions advisor assured her that federal loans, grants and scholarships would cover the $89,000 tuition.

"Importantly, no one at AICH ever advised plaintiff that federal student loans for her AICH bachelor's degree were subject to an aggregate limit of approximately $57,500 which would not cover the full cost of tuition," the complaint states.

"During plaintiffs pre-admission interview with the ADA, the ADA never disclosed that credits earned at AICH were non-transferable to other institutions of higher learning," Washington says, abbreviating assistant director of admissions.

For three years beginning in early 2008, the Art Institute allegedly provided Washington with a yearly statement estimating her tuition and fee charges. She says the balance on those statements usually showed a zero balance, and never mentioned that federal student aid did not cover the cost of her degree.

Nevertheless in late 2011, Washington says she received an email from the school notifying her that she had reached the limit of her federal student loans.

"On the notice date, when plaintiff first learned of the aggregate limit, AICH had collected approximately $52,340 in tuition and fees through federal student loans, for which plaintiff was, and is, indebted," the suit says. "In addition, approximately $3,822 in interest had accrued on said debt. Moreover, as of the notice date, approximately 78 credits remained to be completed for plaintiffs bachelor's degree, at an approximate cost of $37,000."

Since Washington did not qualify for private student loans, and could not afford the school's $650 monthly payment plan, she says she was forced to dropout of school with a $52,162 debt.

In August 2011, the U.S. Department of Justice and four states filed suit against The Art Institutes' owner, Education Management Corp., for fraudulently receiving $11 billion in state and federal aid.

Washington is represented by Armond Marcarian of Sherman Oaks, Calif. She seeks restitution, an injunction and compensatory damages for unfair competition and fraud.

Six Art Institute of California campuses are named as defendants, along with TAIC - San Diego and TAIC San Francisco Inc.

An Art Institutes spokesman could not immediately be reached for comment.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit