Attorney General Swanson adds to allegations in lawsuit against two for-profit colleges

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Minnesota Attorney General Lori Swanson is widening her legal battle against two for-profit schools in Minnesota, adding new allegations to the lawsuit she filed last summer.

MPR News reports that Swanson accuses Woodbury-based Globe University and Minnesota School of Business of of violating state law by making some 6,000 unlicensed student loans. She added that the for-profit colleges charged what she termed "staggering" interest rates as high as 18 percent, more than twice the 8 percent maximum allowed by state law. Swanson also said the schools misled or failed to adequately inform students about their loan obligations.

The Star Tribune reports that Swanson asked a Hennepin County court to invalidate those loans and order the company to reimburse students for payments made on them since 2009.

"Students are telling us one after the other that they were rushed through financial aid, they were just asked to sign a bunch of forms, that the loans weren't really explained to them, they didn't understand," Swanson said.

If the court rules the loans were illegal, Swanson said, it could render them invalid and allow students to get their money back. For now, she said she’s not advising students to stop payment. “Because I don’t know what the school will do to them.”

Last summer, Swanson filed a consumer fraud lawsuit against the schools, accusing them of high pressure sales pitches and of misleading prospective students about their ability to find jobs after graduation.

In a statement, Globe University and Minnesota School of Business denied Swanson's claims.

"We continue to express our desire to come to an amicable resolution with the attorney general," a statement from the schools read. "Unfortunately, up to this point, rather than working with us toward a resolution, the attorney general appears to be continuing to solicit publicity for her own political agenda."

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