Dive Brief:
- Mid-Continent University, which closed last year, is turning to students to cover its debts as it reorganizes under bankruptcy.
- Inside Higher Ed reports the university offered federal loans to students but didn’t get reimbursement from the Department of Education and, after shutting down amid financial troubles, is now trying to force students to pay the loans back.
- Last year the Kentucky attorney general stopped Mid-Continent from pushing students into more expensive private loans to re-pay the debt and now is considering a plan to allow the university to offer private loans with similar interest and repayment policies as the federal ones.
Dive Insight:
Mid-Continent students had no idea the loans they thought they were getting from the federal government were tentative. Ultimately, the university was not able to document, to the satisfaction of the Department of Education, that the students to whom it was granting loans were truly eligible, Inside Higher Ed reports, also noting that the nonprofit institution didn’t have to warn any investors of its shaky financial position and was able to keep it under wraps until its closure.
The latest attempt to pay off debts sustained from its own mismanagement, by using the students it already left stranded by an abrupt closure, is seen as an insulting tactic. Inside Higher Ed includes information from one student who says she’ll refuse to pay. It is unclear what will happen during bankruptcy, however, if Mid-Continent can’t collect on its largest asset.