A $12.4 million settlement aimed at providing debt forgiveness and cash payments to former Daymar College students ended a legal battle between Kentucky Attorney General Jack Conway’s office and the school.
Daymar College, a for-profit institution, agreed Thursday to provide $1.2 million to be distributed to qualified students who attended the college over a five-year period ending in July 2011. The college also agreed to forgo collecting $11 million in debt owed by former students over a six-year span ending in July 2012, according to Conway’s office.
The settlement requires the Owensboro, Ky.-based career college to offer enhanced disclosures for students, including a 21-day, risk-free refund period for most students. It’s a provision that Conway hopes becomes a model among for-profit schools.
The settlement stems from a lawsuit filed by Conway's office that accused Daymar College of multiple violations of Kentucky's Consumer Protection Act. Daymar College denied any wrongdoing in settling the lawsuit. About 7,400 students are eligible for cash payments and about 6,300 can get debt relief, Conway said. Payments will be prorated based on the number of terms students completed and number of claims received. Debt relief is expected to average about $1,725 per student, Conway said. The settlement allows the attorney general's office to keep $200,000 in legal fees.
The school currently has 533 students enrolled at several Kentucky campuses. "This settlement is going to provide assistance to those that were harmed, and it's going to ensure that future students are provided with accurate and financial information about Daymar's degree programs," Conway said at a press conference.Conway's office accused Daymar College of denying students access to financial aid to buy textbook from vendors other than the college's bookstores, which allegedly charged higher prices. Daymar College also was accused of misrepresenting students' ability to transfer Daymar College credits, admitting students who failed the college’s admissions assessment and hiring unqualified faculty.
Daymar College President and Chancellor Dan Peterson said, "Our company policy has always demanded adherence to all laws, rules and regulations everywhere we operate, and we take our compliance obligations very seriously. This is a decision to avoid the continued expense and time associated with litigation so that we can fully focus on educating our students."