Information regarding the Attorney General’s lawsuit against the Minnesota School of Business (“MSB”) and Globe University (“Globe”)
The Minnesota Attorney General’s Office has led the fight for former students who were defrauded by the so-called “criminal-justice” degree programs at Minnesota School of Business (“MSB”) and Globe University (“Globe’) and for students who were charged illegal rates of interest on loans that the schools offered. Minnesota courts have agreed: they have held that Minnesota School of Business (“MSB”) and Globe University (“Globe’) engaged in fraud in the marketing and recruitment of students into the schools’ “criminal-justice” program between 2009 and 2016. The Attorney General’s Office also secured an order holding that MSB and Globe’s institutional lending programs violated Minnesota law and interest-rate caps.
Following the schools’ filings for bankruptcy, the Office won significant debt relief and restitution for criminal-justice students. The Office won cancellation and full refunds for payments that students made on the schools’ illegal institutional loans. Students otherwise affected by fraud or misconduct associated with their enrollment at MSB or Globe, or who were enrolled at the schools when their closure was announced, may be eligible to apply for forgiveness of their federal student loans.
This page includes background information about the lawsuit, the history of the litigation and resolution of the case, and other information for students who may have been affected.
Students Enrolled in the Criminal-Justice Program
The Attorney General’s Office began investigating MSB and Globe in 2013. In 2014, the Office sued the schools, alleging consumer fraud and illegal lending practices. On September 8, 2016, the Hennepin County District Court issued an order finding MSB and Globe engaged in consumer fraud and deceptive trade practices by misrepresenting the job opportunities available to their criminal-justice graduates. In 2017, the Court issued an Order awarding an injunction, penalties, and restitution. The order for restitution set up a process for defrauded criminal-justice students enrolled in the program from 2009 to 2016 to claim restitution--which included refunds for tuition paid, other student expenses or fees paid, and interest paid or incurred for taking out a student loan to pay those costs. The process, however, was delayed by appeals and the schools’ bankruptcy filing.
The restitution process finally began in 2020. Pursuant to that process, the Attorney General’s Office sent out and collected notice and claim forms from eligible former students who attended MSB and Globe’s “criminal justice” program. The Office ended up receiving 920 claim forms from criminal-justice students, though the vast majority of those claims were subject to objections by the schools’ owners. After receiving and responding to those objections, the Office began negotiating a resolution of all issues related to the restitution claims process and to secure maximum relief for defrauded students.
In March 2021, the Office secured commitments from the schools and the U.S. Department of Education that call for (1) complete discharge of all federal student loan debt related to claimants’ enrollment in the criminal-justice program and (2) additional cash relief of $15.8 million for eligible claimants. The agreement was filed in bankruptcy court and involved several parties, including the Attorney General’s Office, the trustee appointed to oversee MSB and Globe, the schools’ owners, and the U.S. Department of Education. Relief for criminal-justice students under the agreement includes:
- Cancellation of 100% of federal student loans taken out to attend the criminal-justice program for all students who filed restitution claims or testified at trial. This will result in $23.6 million in financial relief overall and applies to all 920 claimants.
- $12.3 million in additional cash payments to eligible claimants, which provides compensation for amounts paid by eligible students from other sources to attend the criminal-justice program (e.g., payments from private loans, out-of-pocket payments, GI Bill payments, etc.) and payments made towards forgiven federal student loans.
The agreement also provides for a payment to the U.S. Department of Education of $7 million.
The agreement was confirmed by the U.S. Department of Education and approved by the bankruptcy court in the summer of 2021. After the funding for payments was fully in place, the U.S. Department of Education was able to complete the loan discharge process in late September 2021. Payments then began to be distributed on September 30, 2021. Pursuant to a detailed plan approved by the bankruptcy court, the trustee for MSB/Globe is acting as “Disbursing Agent” and will distribute checks to criminal-justice students. The Attorney General’s Office will assist in identifying the location of eligible criminal-justice students for re-issuance of checks that are returned or remain uncashed.
As explained above, eligible criminal-justice students will have their federal student loans used to attend the criminal-justice program forgiven. According to the U.S. Department of Education, loan discharges are currently being processed. Loans eligible for forgiveness will not return to repayment before forgiveness is issued. The Department will update the credit bureaus automatically to reflect the forgiven loans.
Relief for Institutional Loan Borrowers
This Office also challenged the legality of certain loans issued by the schools—called Educational Opportunities (“EdOp”) and Student Access (“StA”) loans—that were made to MSB/Globe students between 2009 and 2016. The Attorney General’s Office found, and the courts ruled, that the loans were illegal because MSB and Globe were unlicensed and charged interest rates higher than allowed by Minnesota law.
Financial relief ordered by the courts was in stages. The Hennepin County District Court at first limited refunds to interest paid by student-borrowers on illegal loans—totaling $3.7 million. The Attorney General’s Office thus received payment for this amount in 2018 and distributed nearly all eligible refunds to institutional loan borrowers. The Attorney General’s Office also appealed the district court’s decision, arguing it erred by failing to allow full refunds of all principal and interest paid on the illegal loans. The appellate court agreed, and an additional $3.5 million in restitution related to paid principal was later ordered. However, because the later order for additional restitution did not come until after the schools filed for bankruptcy, the Attorney General’s Office was unable to collect this restitution until the resolution of the bankruptcy.
As part of the agreement announced in March 2021, the schools and owners agreed to pay funds to allow for the principal paid on the illegal loans to be fully refunded to affected students. The owners of MSB/Globe met their funding obligations, and the trustee will be able to begin the process of distributing restitution related to principal paid on institutional loans in October 2021. Any remaining restitution owed to students related interest payments will also be subject to final distribution in October 2021.
Students Enrolled During MSB/Globe’s Closure
There is also student-loan relief available for students who were attending the schools when the Court made its findings of fraud and the schools were notified that they would lose authorization to continue operating as a higher education institution in Minnesota. Under federal law, students at schools that close and students who have withdrawn within 120 days of a school’s closure may be eligible to receive a 100% discharge of their federal student loans from the U.S. Department of Education. After a request and advocacy by the Attorney General’s Office, the U.S. Secretary of Education expanded the group of MSB and Globe students eligible for closed-school discharge to include anyone who attended and withdrew on September 8, 2016, and after.
Please note, however, that students are generally not eligible for this discharge if they completed their program through a teach-out agreement with the closed school, transferred the credits they earned at the closed school to a comparable program at another institution, or completed all the coursework for their program.
Students Affected by Other Fraud or Misconduct
If you believe you were defrauded or enrolled at MSB/Globe based on false statements but were not part of the criminal-justice program, you may still apply for cancellation of your federal student loans. Federal law provides that students may apply to the U.S. Department of Education for “borrower defense” to repayment on their federal student loans. Students may be eligible to submit a borrower-defense claim if their school committed fraud against them, misrepresented its services to them, or otherwise violated state law.
Students interested in determining if they are eligible to submit a borrower-defense claim should visit the U.S. Department of Education’s website for more information. Students can also call the U.S. Department of Education’s borrower defense hotline (855) 279-6207 or send an email to: firstname.lastname@example.org.
Other Administrative Actions Taken Against MSB/Globe
Minnesota Office of Higher Education
On September 15, 2016, the Minnesota Office of Higher Education (“OHE”) issued an order revoking MSB and Globe’s registration to operate as higher-education institutions in Minnesota. OHE is a separate agency from the Minnesota Attorney General’s Office and is acting under laws it is authorized to enforce. More information about OHE’s actions is available on its webpage, Information for Globe University and Minnesota School of Business Students.
U.S. Department of Education
The U.S. Department of Education notified the schools that, effective December 31, 2016, all of MSB and Globe’s locations would no longer be eligible to participate in federal student financial aid programs because the schools have been judicially determined to have committed fraud by the Hennepin County District Court and made substantial misrepresentations about the careers available to graduates of their criminal justice program and the transferability of their credits. View the Department’s announcement and the notifications it sent the schools. The Department’s website indicates that it will be posting additional information for affected students of the schools at the following address: https://studentaid.gov/sa/ as the situation develops.
Contacting the Attorney General’s Office
If you have questions about the Attorney General’s lawsuit, you can contact the Attorney General’s Office at (651) 296-3353 (Twin Cities Calling Area) or (800) 657-3787 (Outside the Twin Cities). If you believe you are potentially eligible for restitution and your contact information has recently changed, please contact the Attorney General’s Office immediately.