Embattled California Art College Coughs Up $4.4 Million Settlement

A graduation ceremony at the Art Institute. Via The Art Institute/Facebook.

The Art Institute of California (AIC) has agreed to pay a $4.4 million settlement after Dennis Herrera, the city attorney for San Francisco, began an investigation into the statewide network of art schools run by Argosy University, a for-profit branch of Pittsburgh-based Educational Management Corp., the San Francisco Chronicle reports. The investigation began when staff at the college’s local franchise, the Art Institute of California—San Francisco, began reporting a spike in complaints from students alleging that the AIC had exaggerated employment rates among graduates while underestimating the costs of the program. Also a cause for concern: Some 3,000 students have dropped out of the school since 2009.

In a settlement, the school agreed to create a $1.6 million scholarship fund specifically for students who have left the school since 2009 and wish to resume their studies. That money will remain available for five years, or until it runs out. The school will also award $850,000 worth of scholarships to incoming students. Furthermore, AIC has agreed pay $1.95 million to the city of San Francisco by February 1, 2015, in order to cover the costs of the investigation. Some of that money may be distributed as restitution to students who did not find jobs in their fields of choice after the school suggested that they would.

The school has also agreed to revise its materials in order to give an accurate picture of costs to students, and of the likelihood of employment within their chosen field upon graduation.

“I hope this agreement is a bellwether for other for-profit colleges, highlighting the need to fully inform students about their education costs and job placement prospects,” said Herrera in a statement. “Students deserve accurate information about the schools they attend – and that’s exactly what California law requires.”

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