STATE V. SCHOOL OF BUSINESS

Profiting from worthless college degrees

The Minnesota School of Business and Globe University are for-profit corporations providing postsecondary education services and private student loans in Minnesota. The schools misled prospective students into believing their two-year and four-year criminal-justice programs provided the means to become police officers in Minnesota, and that enrolling in the two-year criminal-justice program would lead to a job as a Minnesota probation officer. The cost of the schools’ criminal justice program ranged from $39,150 to $78,300. As a result of the schools’ misrepresentations, many students were saddled with large amounts of student loan debt and no jobs as police or probation officers.

Lori Swanson filed a lawsuit against the companies in 2014. After a four-week trial, the district court determined that the schools violated the Minnesota Consumer Fraud Act (MCFA) and the Uniform Deceptive Trade Practices Act (UDTPA). The Court ordered a restitution process for students who were misled.

During the litigation, Swanson’s office discovered that the schools also provided loans to students for a maximum of up to $7,500 per loan, at interest rates of up to 18 percent. The schools did not pay out money to students on the loans; rather, the schools' affiliated entities — EdOp Loan Servicing, LLC and Tuition Options, LLC — credited the loaned amount against the student's outstanding tuition balance at predetermined dates during the academic year. The funds were not available to the student for other purposes, and interest on the loans began accruing immediately after the loan was credited against the student’s tuition. Swanson also determined that neither the schools nor their affiliated entities had lender’s licenses under state law.

Swanson amended her complaint to seek an injunction and damages as it relates to the loans. The case went up and down the appellate courts a number of times. At the time Swanson was leaving office, the lawsuit was again in the Minnesota Supreme Court on the issue of whether restitution should be paid to all students who were defrauded or whether the restitution should be limited to only those students who testified at trial. Swanson was also appealing a ruling of the state district court that students whose loans bore an 8 percent rate of interest were not entitled to monetary recovery, even though the lenders were unlicensed.

The following are links to two of the decisions from the Court of Appeals and one decision by the Supreme Court:

Amended Complaint: Download Below.

Memorandum Supporting Summary Judgment: Download Below.

State v. School of Business, 885 NW 2d 512 – (Minn Ct. App. 2016)
https://scholar.google.com/scholar_case?case=218993918427485802&q=swanson+v.minnesota+school+of+business&hl=en&as_sdt=4,24

State v. Minnesota School of Business
https://scholar.google.com/scholar_case?case=14988232701436403790&q=swanson+v.minnesota+school+of+business&hl=en&as_sdt=4,24

State v. Minnesota School of Business, 899 N.W. 2d. 467 (Minn. Sup. Ct. 2017)
https://scholar.google.com/scholar_case?case=12175560631920461818&q=swanson+v.minnesota+school+of+business&hl=en&as_sdt=4,24

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