MN Supreme Court Rules For-Profit Schools Issued Illegal Student Loans
FOX 9 - KMSP
(KMSP) – The Minnesota Supreme Court ruled Wednesday that Globe University and the Minnesota School of Business issued illegal loans to students. Now, Attorney General Lori Swanson is going back to court to ask a judge to cancel the loans.
Swanson also sued Globe several years ago for offering police training classes that were not accredited. The university ended up shutting down that criminal justice program last year.
Wednesday’s opinion, written by Justice David Lillihaug, ruled that Globe University did not have a state license to issue student loans.
Additionally, the university violated state law by changing exorbitantly high interest rates, reaching 12 to 18 percent.
Swanson said the ruling is a victory for as many as 6,000 students who took out loans.
“We expect to go back to court within a week asking fo ra court order declaring the loans void and canceled as a matter of law,” Swanson said. “The unlicensed lending statute, as well as the high interest rates statute, provides that if you issue a loan without a license or issue a loan at illegally high rates of interest, that loan is void… kind of built into the law by the legislature to give it some teeth to make sure people don’t do those things.”
The Attorney General’s office conservatively estimates that Globe issued as $20 million in illegal loans.
This case now goes back to a Hennepin County judge, and the Supreme Court ruling essentially orders that judge to come up with relief that’s consistent with the Supreme Court opinion. So, Swanson’s office will be asking that the judge rule these loans null and void.