SAN FRANCISCO (CBS SF) — The California Art Institute in San Francisco, a for-profit university, has agreed to a $4.4 million settlement with the City Attorney’s office over claims that it allegedly used deceptive marketing tactics.

The City Attorney’s office claimed the Art Institute used tactics that resulted in underestimating program costs for students and boosted job placement numbers for graduates.

Nukeyia, who didn’t want to usedher last name, is attending the Art Institute with the help of four different loans. She said that one of the major selling points is that she was told a lot of students get jobs when they graduate. The school’s own website promises career placement rates of over 90 percent.

But Owen Clements of the City Attorney’s office said that’s not exactly the case. He said, “If you’re gonna say that 90 percent of our students get jobs, you should probably disclose that only 30 percent of our students graduate.”

The City has been investigating claims that the Art Institute of California, which has campuses across the state, used marketing tactics that included advertising inflated job placement rates and underestimated tuition and fees and that it left thousands of students deep in debt and without a degree.

“Those types of misrepresentations are common at for profit schools across the country,” said Robyn Smith of the National Consumer Law Center.   In a recent report, the organization found an increasing number of government lawsuits and investigations involving for profit schools. Smith added, “They’re for profit entities that have a need and responsibility to generate and distribute profits.

In addition to the financial settlement, the Art Institute agreed to reform its recruitment practices and provide scholarships to both current and former students, including those who graduated and never found those promised jobs.

In a statement, City attorney Dennis Herrera said, “I hope this agreement is a bellwether for other for-profit colleges, highlighting the need to fully inform students about their education costs and job placement prospects.”



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