LECORDON BLUE LAWSUIT COULD RESULT IN REFUNDS TO STUDENTS
There are now options available for private and federal loan forgiveness
Allegations Against Le Cordon Bleu[/mk_ornamental_title]
Many students spend a couple years and accumulate tens of thousands in student loans, only to find themselves looking at low paying, entry-level positions when they enter the work force. This unfortunately causes many graduates to either seek employment outside of their desired industry, or default on their student loans while starting out cutting and blanching vegetables hoping to work their way up the restaurant chain.
CEO Todd Nelson of Le Cordon Bleu blamed changing federal support for high-cost for-profit colleges such as this.
Back in 2013, Le Cordon Bleu paid $40 million in order to settle a class-action lawsuit brought on by former students claiming recruiters oversold the benefits of a Le Cordon Bleu diploma, leaving them with exorbitant amounts of student loans and low-paying industry jobs.
New federal regulations on predatory for-profit colleges that take advantage of students capped student loan payments to 20 percent of a graduate's after-tax wages hit Le Cordon Bleu particularly hard. CEO Todd Nelson cited these new regulations as one reason for the closure. In a statement, he claimed the regulations make it difficult to project the future for career schools that have higher operating costs, such as culinary schools that require expensive commercial kitchens and ongoing food costs.'
There is good news in all of this though. Former students from Le Cordon Bleu are eligible for loan forgiveness programs for their student loans. For more information on Le Cordon Bleu loan forgiveness, call (800) 940-8911 or fill out the form below.
IT ONLY TAKES ABOUT 10 MINUTES TO SEE IF YOU QUALIFY!
Call us at (800) 940-8911 or fill out the form on this page to speak to one of our representatives. It's 100% free to see if you qualify for student loan forgiveness, and only takes a few minutes.
This is not the first time LeCordon Bleu has been on the legal hot seat '“ several LeCordon Bleu students filed a class action suit accusing the culinary school of fraud. This case is still pending (see details in the video below). CFPB's suit focuses on student finance, but also touches on the same allegations the class action students make. The consumer bureau believes LeCordon Bleu pushed students into high-cost private student loans the school knew had a high probability of default. The lawsuit accuses the private school of unfair, deceptive, and abusive acts and practices and of violations of the Truth in Lending Act. The lawsuit has four main premises:
#1 High pressure predatory loans '“ They accuse LeCordon Bleu of rushing prospective students through the lending process with automated applications. Many didn't know they had even taken out loans until they were past due and collections activity had begun. The loans had insanely high 10% origination fees (by comparison, federal loans range from 1%-4.3%). Interest rates were as high as 16.25% which is drastically higher than federal interest rates and much more than other private student loan interest rates.
#2 Non-transferable credits '“ LeCordon Bleu '“ and other private schools of that ilk '“ are accredited through an organization that specializes in accrediting private schools. This is not good and, in a way, could be construed as not being accredited at all since credits typically won't transfer to most other schools, leaving students with few (or no) options. This forces students to stick with LeCordon Bleu since they can't transfer out, and perpetuates the costly private student loan cycle.
#3 Overly ambitious job placement '“ LeCordon Bleu ads clearly lead prospects to think they'll be sitting pretty in the job market with an LeCordon Bleu degree or certificate but this is not how the results play out for many. A quick Google search churns up a number of dissatisfied former LeCordon Bleu students. Career prospects are not nearly as lucrative as promised and this, combined with overwhelming student loan balances, makes life hard on grads.
#4 Lending with default in mind '“ According to CFPB, LeCordon Bleu made loans knowing there was a 64% likelihood of default. The high price tag is almost an assurance that students will have to borrow to attend and loan revenue is LeCordon Bleu bread and butter. The high prospect of loan default can affect a grad's credit reports, cost them job opportunities, ruin their credit, make it difficult for them to get competitive rates for car loans and other financing and, in general, make life drastically harder on them.
When announcing the lawsuit, CFPB Director Richard Cordray said, We are taking our first public enforcement action against a for-profit college.' They key word in that sentence is first,' as in: there will be more. For those that run for-profit colleges, this is tantamount to an utterance that winter is coming' and, if CFPB has its way, it may be a nuclear winter. But if LeCordon Bleu is truly preying on students desperate to improve their lot in life through education, then they should be subject to corrective action at an atomic level.