September 10, 2019

Harris, Colleagues Call on Defunct For-Profit College Education Corporation of America to Stop Attempts to Collect from Former Students

WASHINGTON, D.C. – U.S. Senator Kamala D. Harris (D-CA) joined Senators Elizabeth Warren (D-MA), Doug Jones (D-AL), and Patty Murray (D-WA), along with Senators Catherine Cortez Masto (D-NV), Chris Van Hollen (D-MD), Sherrod Brown (D-OH) and Richard Blumenthal (D-CT) in sending a letter to Stu Reed, President and CEO of now-defunct Education Corporation of America (ECA), and John F. Kennedy, ECA’s Receiver, regarding attempts to collect outstanding accounts receivable and other financial obligations from ECA’s former students. These attempts come nearly a year since the company’s collapse.

“ECA’s collapse left former students who took out thousands of dollars in federal student loans with partially completed degrees or credentials with little to no value,” wrote the lawmakers in their letter. “Given the hardships many of these former students already face with regard to federal student aid, collecting on former students’ accounts receivable adds insult to injury.”

On December 5, 2018, after years of declining enrollment and revenue, ECA announced that it would immediately close its 70 campuses across the country. The closures impacted nearly 18,000 current students and scores of former students, many of whom had taken out thousands of dollars in federal student loans. Shortly before the collapse, a Receiver was appointed to oversee and manage debts held by ECA. While the Receiver reportedly agreed not to collect the accounts receivable from students enrolled at the time of ECA’s collapse, the Receiver did not make the same commitment regarding all former ECA students, including those who withdrew prior to ECA’s collapse.

Last month, after nearly a year since ECA’s collapse, the Receiver requested permission from a federal judge to collect the outstanding accounts receivable held by former students to help settle ECA’s remaining debts. According to court records, ECA’s Receiver has already identified a debt collector willing to purchase the outstanding accounts receivable.

A copy of the letter can be found HERE.

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