ST. PAUL, Minn. — The Minnesota Supreme Court ruled Wednesday that two for-profit schools, Globe University and the Minnesota School of Business, issued illegal loans to students.
The justices found that the schools issued the loans without proper licenses and with illegally high interest rates. Attorney General Lori Swanson said nearly 6,000 students have received the loans since 2009.
The colleges offered loans ranging from $3,000 to $7,500, with interest rates between 12 and 18 percent, Minnesota Public Radio News reported (http://bit.ly/2vK1B2c ). The state Supreme Court defined those as closed-end loans, which must have interest rates of 8 percent or less.
Swanson plans to ask a lower court to declare loans null and void that were made on or after Jan. 1, 2009. She also wants the schools to refund borrowers for payments of principal, interest and other charges.
“We felt it was important for the Minnesota Supreme Court to give direction on the matter,” Swanson said. “Many of the students who were enrolled in loans of up to 18 percent interest have not been able to find gainful employment with their degrees and are swimming in student loan debt.”
In a statement, a representative of the schools said they were disappointed by the ruling.
A Hennepin County court previously found that the schools, which share ownership, misrepresented students’ ability to transfer credits fraudulently marketed and recruited students for their criminal justice programs. The schools were ordered to pay restitution to more than 1,200 criminal justice students.
The Minnesota Office of Higher Education stopped allowing the schools to register new students in the state.
In December, the U.S. Department of Education stopped the schools’ access to federal student aid dollars. The schools then closed their Minnesota campuses.
Information from: Minnesota Public Radio News, http://www.mprnews.org