Minn. School Of Business, Globe Ordered To Repay Illegal Loans

MINNEAPOLIS (WCCO) -- In 2014 the Minnesota School of Business and Globe University were sued by the State of Minnesota. The civil suit was on behalf of law enforcement students like Dillon Zerwas.

He was among the students claiming their degrees didn't meet qualifications necessary for employment in Minnesota.

At the time the suit was filed, Zerwas said, "I told him I want to be a police officer. He said not in Minnesota, you're not accredited."

The state's suit was later amended to further charge the for-profit schools with illegally issuing student loans. The schools argued that the educational financing was actually open-ended credit plans.

"They enrolled in criminal justice programs that wouldn't make them eligible to be police officers," explains former Minnesota Attorney General, Lori Swanson. "They paid high tuition to begin with on top of interest financing their college at up to 18 percent."

Swanson, now a private practice attorney, brought the original case. She says the courts previously ordered the schools to repay about $3.5 million of charged interest above 8%.

This latest ruling by the Minnesota Court of Appeals will order repayment of a student's loan principal too. Those payments could affect an estimated 6,000 former students.

Added Swanson, "we think they have the means to repay, they have the assets and made a lot of money when they were operating."

But in 2016, the schools closed all of its Minnesota campuses in the midst of the litigation.

In a written statement, Minnesota School of Business and Globe responded, saying:

"For more than a century, Globe University and Minnesota School of Business provided a valuable education to its students. The district court agreed and issued its order taking into account that value. The Court of Appeals ignored the district court's determinations and in doing so, effectively stripped the district court of its power to apply Minnesota law to the circumstances before it. The Schools are disappointed with the decision and are considering their options for review."

Former students can get more information here.