Much to everyone’s utter shock, students and employees showed up to class and work only to find the doors locked and no one answering phones. A class action lawsuit was launched on April 14, 2010, against in the United States District Court for the Eastern District of Michigan in Detroit. Thousands of students from 14 states went to attend class in December 2009 and found the schools had all closed suddenly. Over 7,500 people are included in the class action suit as the lawyers attempt to get their tuitions back and address the issue of the promised lifelong job placement which was part of the service they paid for. This lawsuit also includes individuals who co-signed loans on behalf of students who now find themselves holding the bag for loans where no one got an education. Students due to graduate with only one or two classes left suddenly found they weren’t graduating after all.

Students from Georgia, Indiana, Maryland, Michigan, Missouri, Pennsylvania, Wisconsin, Delaware, Illinois, Kansas, Minnesota, Ohio, and Virginia joined the class action suit which alleges that the school didn’t hold up their end of the bargain. Considering the bargain was anywhere from $13,500 to $28,000 in tuition in exchange for an education as a computer technician with Microsoft certification and the doors were locked, it’s safe to say that goes beyond allegation. Considering the school refund policy indicated tuition would be returned if the school ever closed and that warning would be provided, students and employees alike had a right to be angry about the closure.

Tuition amounts varied depending on when the students enrolled as the school had suddenly sliced its tuition rates to roughly half. Not a dime was returned to students for their tuition payments and all evidence leads us to believe that the school knew well in advance that they were facing some serious financial difficulties that could potentially cause them to close their doors. Rather suddenly, the school hired a large number of salespeople, starting pushing enrollment, increased compensation and commissions for enrollment officers, dropped tuition, and started looking for warm bodies to fill seats.

In addition to the class action suit, the school’s main lender, BB&T is attempting to get back $1.5 million in loans from the school and owner, David L. Rau.  When Rau was questioned, he stated the sudden closure was due to BB&T removing their line of credit which was used for their operating expenses and because their accounts had been frozen. This made it effectively impossible for the school to remain open. This decision supposedly came as a result of stricter policies on student loan funding and higher federal loan funding the school couldn’t gain access to which meant the lender saw the school as a substantial risk expecting them to not be able to cover their amounts due to possible decreased enrollment. When contacted, BB&T said this statement was false. Considering the school had been open for 20 years and seemed to have a pretty solid reputation up until that point, the employees and supporting businesses were as shocked as the students.

Students were originally told to contact the Department of Education to make claim against the surety bonds held on the school’s behalf. These bonds are a security required by all for-profit schools but wouldn’t be helping students much as the payouts against them would be the equivalent of chicken feed. As for the class action suits against the company, not much has been heard about them in the 5 years since they were launched after the school slammed its doors shut.

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If you feel you were defrauded by the school you attended or you are being treated poorly as a distressed borrower by your creditors, take the free challenge debt review to find out what options you have regarding your student loans.