Students have over $1 million in loans cancelled by Colorado AG

Art Institute students have federal and school loans dismissed after misrepresentation

An 8th Circuit Court of Appeals ruling held up a lower court’s award of $106 million in a decades-long case involving bad actors and a bank's involvement in a Ponzi-like scheme.

The Art Institute of Colorado students defrauded by the corporate owner Dream Center Education Holdings were returned over $66,000 by Colorado Attorney General Phil Weiser. When the institute closed, it left students with non-transferable credits, large debt loads and “degrees of very limited value.”

The students of the school were defrauded when Dream Center failed to inform them it had lost its accreditation from the Higher Learning Commission, according to an AG press release. Accreditation recognizes that a place of higher education maintains some quality standards and helps students decide which schools to attend.

In January of 2018, the institute lost accreditation, however, Dream Center “misrepresented” to students that the school was accredited until June of that year. Once the owner had disclosed the accreditation loss — the institute closed.

As part of a settlement reached with Dream Center in receivership court following an investigation, students nationwide who were attending the institute at the time are no longer required to pay the “more than $1.2 million” in loans they taken out directly from the school.

“Deceiving students who are expecting to receive an accredited degree and causing students to incur thousands of dollars in debt can have lasting financial implications for those students,” Weiser said in a statement.

He continued to explain that by ensuring the money from the owner is returned to the students, it will help remedy the financial harms caused by Dream Center . Weiser successfully urged the U.S. Department of Education to dismiss Federal student loans for approximately 500 former Art Institute students last fall.

The AG’s Office facilitated the return of some monies to students lost due to the deception of the school, and the $66,000 refunded came from loan payments students had made directly to the school for credits on or after Jan. 20, 2018.

Students who attended and borrowed from the institute as of Jan. 20, 2018, can expect to receive a letter from Tuition Options, their servicer, notifying them “certain” institutional loans are subject to the settlement, an adjustment to their loan balance within the last five months.More than 50 students will receive checks from the AG’s Office for amounts paid on intuitional loans for the period of misrepresentation by Dream Center.

Further, students enrolled from Jan. 20, 2018 to the school’s closure can also apply for remaining loans to be discharged, meaning all would be cancelled, due to the closure. More information from federal loan servicers from the department of education can be found at

Student borrowers who have questions or need help, can contact the AG’s Student Loan Ombudsperson at 720-508-6975 or at [email protected].

— Avery Martinez

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