SCOMN: Globe U, Minn. School Of Business Must Void Student Loans

Barsaba Taglieri
Luglio 27, 2017

This ruling comes on the heels of last year's court action, wherein the Hennepin County District Court ruled the companies violated state consumer fraud laws when students enrolled in a criminal justice program "that did not prepare them to become police officers or probation officers". The schools had charged as much as 18 percent interest on the loans, which ranged from $42,000 for a two-year degree to $89,000 for a four-year degree.

Loans made without a license in Minnesota are considered null and void, and the debtor is not required to pay them back.

The Attorney General's Office says companies must obtain a lender's license from the Minnesota Department of Commerce before issuing loans.

Those decisions led most of Globe and the Minnesota School of Business campuses to close, but some were taken over by other institutions.

MSOB and Globe University called this product a "loan" at least 45 times in a loan contract with students, but claimed in court the product was not a loan but an "open-end consumer credit plan". The university ended up shutting down that criminal justice program previous year. In a statement, a representative of the schools said they were "disappointed" with the ruling. Lower courts initially agreed with that decision and the state's allegation of illegal loans was thrown out of the lawsuit.

Minnesota law requires student loan interest rates to be capped at 8 percent.

The attorney General is confident the Supreme Court will order Globe to void all loans, which would mean no repayment for loans made after 2009 and those who have paid back the loans will likely get their money back.

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