CHICAGO -- Keishana Mahone had spent a year studying graphic design when she got the inconceivable news: Her college was closing.
Being in her early 40s, and not wanting to spend years to get a degree, she'd hoped Illinois Institute of Art in Chicago would help her quickly sharpen her skills and advance her career. Instead she left school saddled with student loans and worthless academic credits.
"I was devastated," said Mahone, of the Auburn Gresham neighborhood. "Every time I think back on it, I want to cry."
Mahone is among hundreds of students whose lives were upended when the for-profit chain of schools shut down in December 2018. The Chicago and Schaumburg campuses -- not related to the School of the Art Institute of Chicago -- were among dozens owned by a troubled Pittsburgh company that were closed throughout the U.S.
On Friday, the U.S. Department of Education announced it was canceling the student loan debt for more than 1,500 people in Illinois and Colorado. The move will erase around 4,000 loans, officials said.
The announcement came amid increasing scrutiny over the department's oversight of the schools, and less than three weeks after Mahone and four others sued the department and Secretary Betsy DeVos alleging the agency was complicit in the mismanagement of the institutions.
The students and members of Congress have asserted that federal officials knew the schools were operating without accreditation, which should have disqualified them from Title IV federal financial aid programs and prevented students from borrowing to pay tuition and fees. Instead, they allege, the department authorized federal funding then tried to cover it up.
Aaron Ament, president of the National Student Legal Defense Network, which filed the federal lawsuit, called the announcement "a major victory" for the students.
"We're here today because many of these students had the courage to stand up and fight back," Ament said. "We are really thrilled for them that they will get their loans discharged and be able to move on with their lives."
Education Department officials have denied wrongdoing, instead blaming the school's oversight agency.
"The Department is committed to holding institutions and accreditors accountable to the students they serve," DeVos said in a statement. "In this instance, students were failed and deserve to be made whole."
In early 2017, Dream Center Education Holdings LLC bought dozens of schools under the Art Institute, Argosy University and South University names from Education Management Corp. Dream Center leaders announced they would convert the institutions from for-profit to not-for-profit.
The Higher Learning Commission, which accredits schools throughout the Midwest, approved the acquisition in January 2018 but removed accreditation for the Illinois and Colorado art schools pending review.
Schools can operate without being accredited. In this case, however, it meant future academic credits could be worthless to potential employers or to other schools. For-profit schools also cannot receive federal student aid unless they are fully accredited.
Students said they didn't find this out until July 2018, when Dream Center announced the impending closure during break between quarters.
"All of the sudden, it was like a bomb had dropped," Mahone said. "There was nothing leading up to us not having a school anymore."
"I didn't realize what accreditation was until we didn't have it anymore," said Emmanuel Dunagan, of Bellwood. "We got one email about the loss of accreditation. The way it was worded, and I'm an intelligent person, you would not have understood it without having it explained."
Mahone left school in July. RJ Infusino, of Wood Dale, withdrew from the Schaumburg campus in September. Dunagan finished his two remaining classes before the school closed in December 2018.
"It was madness," Infusino said. "I didn't have a good understanding of whether I'd be able to graduate. I'd already spent close to four years on this and to not get my degree would have been a waste of time."
The House Education and Labor Committee has been investigating the Dream Center collapse for several months.
In October -- the same day the students' lawsuit was filed -- Virginia Rep. Bobby Scott released scathing allegations the department skirted federal law and illegally doled out nearly $11 million in federal student aid to those schools.
Scott has threatened subpoenas.
"If the department continues to refuse to respond, the committee will then be forced to conclude that the department is purposefully frustrating Congressional oversight for reasons that are not in the best interest of the American taxpaying public," Scott wrote in a letter to DeVos.
DeVos said the department was canceling loans because of the HLC's "newly developed and improperly defined accreditation status" that has hurt students' ability to find jobs and transfer to other schools.
Eric Rothschild, litigation director with Student Defense, said the accreditor did nothing wrong. He said the lawsuit and Scott's investigation compelled the department to erase the students' debt, which should take effect immediately.
"I think the conduct that was revealed, including the way they answered questions to Congress about this, was frankly indefensible," Rothschild said. "This was a way they could avoid defending this in litigation or further hearings."
The lawsuit will continue as attorneys sort out how much debt will be canceled and whether the department also will reimburse students for payments they've already made.
Meanwhile, the students are trying to move on. Infusino transferred to a Florida-based online college. He was seeking to erase about $7,600 in debt. Dunagan is doing internships in designing. His loan debt had reached more than $11,000.
Mahone is trying to decide if it is worth starting over at another school. She has about $3,600 in loans that could be canceled.
"They stole from us, they lied to us, they manipulated us and now it's like, move along," Mahone said. "I don't want anyone else to have to go through this. It derails dreams."
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