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St. Paul, MN (KROC-AM News) - Hundreds of former students of two defunct for-profit colleges in Minnesota could soon see their student loan debt erased and receive additional compensation.

Minnesota Attorney General Keith Ellison has announced a tentative settlement totaling $42 million to benefit 920 former students of the Minnesota School of Business and Globe University. The Minnesota School of Business operated the campus in northwest Rochester until both of the postsecondary schools shut down three years ago after the US Department of Education removed them from the federal student loan program. That followed a ruling by a Minnesota court that found the schools committed consumer fraud by misleading students.

A news release issued by Ellison's office says the courts also canceled high-interest student loans issued by the schools and ordered the institutions to make refunds to the affected students. About $3.7 million was returned to the students in 2018 before the Minnesota School of Business and Globe Temple University filed for bankruptcy. Over $23 million from the settlement will be directed at forgiving outstanding federal student loan debt, while $15.6 million will be paid out as compensation to students in the criminal justice program that was the focus of the consumer fraud actions.

“This agreement should finally resolve one of the biggest consumer-fraud cases ever brought by the Attorney General’s Office, and one of the only cases against a for-profit college ever brought to trial in America. While no dollar amount can make up for all the pain and loss that these students and their families experienced, I hope the relief my office has worked so hard to win will allow them to start affording their lives again after this terrible experience.”

Ellison says the settlement is part of a plan to finalize the bankruptcy proceedings involving the for-profit schools. It still needs to win the final approval from the Department of Education and the Bankruptcy court.

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