Press Release

Attorney General Ellison issues a statement regarding the State’s lawsuit against the Minnesota School of Business (“MSB”) and Globe University (“Globe”)

The Minnesota Attorney General has issued a statement to provide information to affected students and the public regarding the State’s lawsuit against the Minnesota School of Business (“MSB”) and Globe University (“Globe”). “Students who were harmed by fraud or other unlawful activity by MSB and Globe can be confident that this Office will continue to hold these schools accountable and do whatever it can to enforce Minnesota law and obtain full relief for victims,” Attorney General Keith Ellison said.

The following includes background information about the lawsuit, an update on the lawsuit’s status, and other information for students who may be affected.

If you are seeking information about the status of refund checks related to payments on MSB and Globe’s institutional loans, please know that on May 21, 2019, this Office mailed refund checks to student-borrowers who had returned verified claim forms by January 21, 2019.  The Office is currently coordinating the issuance of additional refund checks for borrowers who submitted claim forms after January 21. Please check this webpage for updates. More information about the background and process underlying the refund checks is below.

Restitution for Criminal-Justice Students

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. The Order was the result of a four-week trial from a lawsuit filed by this Office against the schools in 2014.

On January 4, 2017, the Hennepin County District Court issued an Order awarding an injunction, penalties, and restitution. The order for restitution set up a process for criminal-justice students enrolled in the program between January 1, 2009 to the present (the timeframe covered by the lawsuit) who believe the schools misled them about their ability to become a Minnesota police officer or probation officer. The amount of restitution that eligible students may receive under that order includes 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 stayed (put on hold) pending the MSB and Globe’s appeal of the order for restitution.

On November 6, the Minnesota Supreme Court upheld the restitution process ordered by the district court. The Court reaffirmed that “The Schools should not profit from fraudulently providing a useless degree to their students.” 

Following the Supreme Court’s decision, the case will return to the lower court to proceed with the restitution process. The Attorney General’s Office has information about which students are entitled to relief who attended the criminal-justice program and will notify students affected by the restitution order about their opportunity to submit a claim for restitution.

“Educational Opportunities” and “Student Access” Loan Claims

This Office also challenged the legality of certain loans issued by the schools—called Educational Opportunities (“EdOp”) and Student Access (“StA”) loans. This 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. The Hennepin County District Court, however, ruled that only students loans above 8% were illegal and limited refunds to interest paid by student-borrowers on such loans. The State appealed, and the appellate court held that refunds of interest and principal  should have been ordered.  The appellate court, however, affirmed that only loans above 8% interest were illegal.  The appellate decision became final on August 21, 2019.

Based on the district court’s previous order for interest refunds, this Office received payment from MSB and Globe for the amount that the Hennepin County Court awarded in interest refunds.  Based on MSB and Globe’s records, the Office verified recipients entitled to refunds and the amounts of those refunds, notified affected students, and has been in the process of coordinating with a separate state agency, Minnesota Management and Budget, to distribute refunds.  On May 21, 2019, the Office mailed refund checks to student-borrowers who had returned verified claim forms by January 21, 2019.  The Office is still accepting claim forms and coordinating the issuance of additional refund checks for borrowers who submitted claim forms after January 21.

As for refunds related to principal, the district court stayed (put on hold) further proceedings on October 3, 2019 pending resolution of the State’s other claims currently pending before the Minnesota Supreme Court.  Once the Minnesota Supreme Court issues its decision regarding the State’s other claims, the State will pursue an order from the district court for the additional principal refunds and additional remedies regarding the State’s claims over MSB and Globe’s EdOp and StA loans. If you have a question about the status of refund checks, or you have other questions about the State’s claims related to EdOp and StA loans, you should contact the Attorney General’s Office at (651) 296-3353 (Twin Cities Calling Area) or (800) 657-3787 (Outside the Twin Cities).

What Other Regulatory Actions Are Happening?

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.ed.gov/sa/ as the situation develops.

Resources for Affected Students

Minnesota Attorney General’s Office
If you believe you are a criminal-justice student who is eligible to submit a claim for restitution, have questions about the restitution process on appeal, or have any other 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.

Borrower’s Defense to Repayment of 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: borrowerdefense@ed.gov.

Defense to Repayment of Private Student Loans
A federal regulation called the “Holder Rule” allows consumers to (in some cases) assert defenses to a creditor’s collection of money based on the seller’s false representations. The Federal Trade Commission has stated that private student loans fall within the scope of the Holder Rule. Accordingly, you may be able to cancel existing debt from your private student loans if your school fraudulently induced you to enroll and had some relationship with the private lender that issued your loans. You may wish to consult our flyer, The Holder Rule: When You Take Out a Loan and the Product is Defective or Fraudulent for more information. Our Office cannot give you legal advice or tell you whether the Holder Rule may apply to your situation. As a result, you may wish to consult an attorney about whether the Holder Rule may apply to your situation and how to assert it. You may wish to consult our publication, Hiring an Attorney, for guidance in looking for an attorney.

Discharge of Federal Student Loans Due to the Closure of MSB and Globe
Students affected by closure may wish to apply for “closed school discharge” related to loans they took out to attend MSB and Globe. Under federal law, enrolled 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.

Please note, however, that students are generally not eligible for this discharge if they: (1) withdrew more than 120 days before a school’s closure; (2) they are completing their program through a teach-out agreement with the closed school, or are transferring the credits they earned at the closed school to a comparable program at another institution; or (3) have completed all the coursework for their program.  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 (the date the district court issued its findings of fraud in the Attorney General’s case). If you have questions about the process for closed school discharge, you should consult the Department of Education’s website and fact sheet for MSB and Globe students.