FRANKFORT, Ky. (September 10, 2015) – Kentucky Attorney General Jack Conway today announced a landmark $12.4 million settlement with Daymar College of Owensboro, Ky. The settlement resolves three years of litigation and the consumer protection lawsuit filed by Attorney General Conway. The settlement, filed September 10, 2015 in Daviess Circuit Court, provides debt relief and/or cash payments and strong injunctive terms governing Daymar’s future operations. It’s estimated that 12,294 former Daymar students are eligible for settlement relief.
“This settlement with Daymar will provide much-needed relief for past Daymar students and protection for students considering enrolling in Daymar in the future,” said Attorney General Conway. “This settlement ensures that future prospective students are provided with accurate and factual information about Daymar’s degree programs and a risk-free trial period that we hope will become a model for other schools.”
The Consent Decree, entered this morning in Daviess Circuit Court, requires Daymar to pay $1.2 million to the Office of the Attorney General, which will be distributed to qualified participating students who attended Daymar between July 27, 2006, and July 27, 2011. It will be prorated according to the number of terms the students completed and the number of claims that are received.
Class Action Administrators, Inc. has been appointed by the court to serve as claims administrator and will coordinate distribution of the funds. The administrators will send claim notice packets to all qualifying students beginning on October 26, 2015. Any qualifying student that wishes to participate in the distribution must provide the information requested on the claims form and return it no later than December 9, 2015. Any qualifying student that does not receive a notice should contact Class Action Administrators at 844-814-8813.
Daymar will also forgo collection of an additional $11 million in institutional debt owed to it by former students whose last day of attendance at a Kentucky Daymar campus was between July 3, 2006 and July 26, 2012. These students are not required to file claim forms regarding the debts for which Daymar has agreed to forgo collection. Daymar will correct and/or remove credit reporting of collection activity regarding any amount on which it agreed to forgo collection. This does not include debt that is owed to non-Daymar entities, such as the federal government. The Kentucky Office of the Attorney General does not have the authority to require federal loan forgiveness. Students with questions about their federal loans, including how to lower or cap the monthly loan payment, consolidate multiple federal loans or to determine if they qualify for loan forgiveness, should visit www.studentloans.gov for further assistance.
The court appointed former Tennessee Attorney General Robert E. Cooper, Jr. to serve as Compliance Monitor for the next two years. In order to carry out his duties, the Compliance Monitor may, among other things, employ secret shoppers to pose as prospective students during the recruitment and admissions process, conduct campus visits, review complaints, observe admission and financial services trainings, review student files and interview Daymar employees and students.
“The Consent Decree provides thorough and essential protections for potential and current Daymar students,” Cooper said. “I look forward to working closely with Daymar to ensure compliance with all of the decree’s standards.”
Mr. Cooper served as the Tennessee Attorney General from November 1, 2006 to October 1, 2014 and has a strong record of consumer protection; including serving on the executive committee of the QuinStreet multistate led by Kentucky, which obtained a settlement requiring the for-profit school lead generator, QuinStreet, Inc., to shut down the deceptive website GIBill.com.
History of Lawsuit
The lawsuit, filed in July of 2011, alleged that Daymar College violated the Kentucky Consumer Protection Act by:
- Denying students access to financial aid to buy their textbooks from vendors other than Daymar’s bookstore, which allegedly charged significantly higher prices than other vendors.
- Misrepresenting students’ ability to transfer credits earned at Daymar to other institutions.
- Admitting students who failed Daymar’s admissions assessment in violation of the school’s own admissions policy.
- Hiring unqualified faculty who lacked the required credentials.
Daymar denied it violated the Kentucky Consumer Protection Act and in agreeing to settle the lawsuit continues to deny any wrongdoing.
In addition to debt relief and/or financial compensation, the settlement also contains strong injunctive terms governing Daymar’s future operations. It requires a 21-day, risk free refund period for most students and enhanced disclosures to students – including a one-page document titled “Know Before You Owe.” The disclosure document contains detailed information regarding the student’s selected program of study; including the total amount of tuition, the median debt for degree completers, the program’s federal student loan cohort default rate, degree completion rate, median earnings for completers, and a warning about the limitation on transferability of Daymar credits to other institutions.
Another provision requires Daymar to strictly adhere to its admissions criteria and established policy. If it admits a student that does not meet the minimum assessment score, the compliance provision requires Daymar to document its decision-making process for determining that the student has the ability to successfully complete his/her program of study and obtain employment in the field.
In addition, Daymar must only hire qualified faculty members whose credentials meet or exceed their accreditors’ requirements for the degree program and the course level in which the instructor teaches. And, for a period of two years, Daymar must submit information regarding all faculty employed by the school to the Kentucky Council for Post-Secondary Education for its review and approval.
“I appreciate Daymar coming to the table to resolve this lawsuit and working with our office to make important changes to their operation to ensure that students are provided accurate and factual information about Daymar’s programs,” Attorney General Conway said.
For two years, Daymar will also conduct free, bi-monthly career-services workshops that will be made available to current and former students. The workshops will address topics such as creating and updating a resume, filling out job applications, how to search for employment and interviewing skills. Daymar has also agreed to provide a free “skills” class for all first term students. This course will address such topics as study skills, organization, literacy, financial skills and interest inventories.
Daymar has also changed its policy regarding textbooks and now includes the price of books in tuition. If it reinstitutes its former policy, the Consent Decree prohibits Daymar from engaging in practices that deny students the ability to access their student aid to purchase books from other vendors.
Attorney General Conway leads a working group of 37 states investigating certain for-profit schools. This settlement is one of the largest involving a school the size of Daymar and provides important protections for Daymar students in the future.