Daymar College Lawsuit: $12.4M Settlement and Student Relief

The Daymar College lawsuit was a 2011 consumer protection case brought by Kentucky Attorney General Jack Conway alleging the for-profit school misled students about credit transfers, overcharged for textbooks, admitted applicants who had failed its own entrance tests, and hired underqualified faculty. It ended in a 2015 consent decree valued at $12.4 million, combining $1.2 million in cash restitution with $11 million in forgiven student debt for thousands of former Kentucky students.¹

What Kentucky Accused Daymar of Doing

The Attorney General’s Office brought four categories of claims under the Kentucky Consumer Protection Act. Daymar allegedly stopped students from using financial aid to buy textbooks from outside vendors, steering them to its own bookstore at significantly higher prices. It allegedly misrepresented whether the credits students earned would transfer to other colleges. It admitted students who had failed its entrance assessments, in violation of its own admissions policies. And it hired instructors who lacked the credentials required for the courses they taught.²

The credit-transfer allegation hit hardest. Students who believed their coursework would count toward a degree elsewhere found that if they left Daymar, they essentially had to start over.

The $12.4 Million Settlement

After roughly four years of litigation, the settlement was filed as a consent decree in Daviess Circuit Court on September 10, 2015. It covered an estimated 12,294 former students. Daymar did not admit wrongdoing.¹³

Two components made up the deal:

Cash restitution of $1.2 million, distributed to former students who attended a Kentucky campus between July 27, 2006, and July 27, 2011, and who filed approved claims. Daymar paid $1.4 million total, with $200,000 kept by the Attorney General’s Office for fees and a claims administrator.⁴
Forgiveness of $11 million in institutional debt owed by former students whose last day of attendance fell between July 3, 2006, and July 26, 2012. Daymar also had to correct or remove negative credit reporting tied to those debts. Anyone who received more than $1,000 in debt relief was not eligible for the separate cash payments.¹

In December 2016, Attorney General Andy Beshear announced that restitution checks were going out to nearly 3,500 former students, averaging about $345 per person, calculated from the number of terms each student completed and the volume of approved claims. Nearly 6,500 students benefited from debt forgiveness, with the average amount forgiven around $1,700.⁵³

The Separate Student Arbitration Case

Daymar faced a second front. In 2010, fifteen former students led by Brittany Dixon sued the school over alleged misrepresentations about their job prospects and the quality of their education. Daymar tried to force the case into arbitration under a clause on the back of its two-page enrollment agreement.⁶

The students argued the clause was unconscionable. It sat in a stack of roughly a dozen forms signed in a 90-minute enrollment session, was not in bold type, and could impose arbitration costs as high as $10,000 for a three-to-four-day proceeding. A McCracken Circuit Court judge sided with 11 of the 15 plaintiffs, finding they were “mired in poverty” and could not afford the fees, and that many held only GEDs and were not adequately informed of the rights they were waiving.⁶

The Kentucky Court of Appeals reversed, but on April 2, 2015, the Kentucky Supreme Court held that the students could sue in circuit court. The Chief Justice called the arbitration clause “both procedurally and substantively unconscionable.”⁷

What Happened to Daymar

The school did not last long after the settlement. Daymar had operated campuses in Paducah, Owensboro, Bowling Green, Louisville, Madisonville, Albany, Bellevue, Scottsville, Clinton, and Russellville. The Owensboro and Madisonville locations stopped enrolling new students in July 2016 and were expected to close in 2018 as remaining students graduated or left.⁸

In November 2018, Philadelphia-based Hussian College acquired Daymar. Kentucky campuses closed over time, and non-Kentucky locations were rebranded as Hussian campuses. On June 12, 2023, Hussian announced it was shutting down, citing the economic fallout from the COVID-19 pandemic and “unfortunate decisions by former management.” The Accrediting Commission of Career Schools and Colleges formally withdrew accreditation for Hussian’s main campus and five branches effective July 17, 2023, after the school failed to provide adequate teach-out arrangements.⁹¹⁰ All former Daymar campuses in Kentucky are now listed as closed by the Kentucky Council on Postsecondary Education.¹¹

Relief Options for Former Students

If you attended Daymar and still carry federal student loan debt, two federal programs may apply.

Borrower Defense to Repayment lets borrowers seek cancellation of federal Direct Loans when a school engaged in misrepresentation or violated state law. That standard tracks closely with what the Kentucky lawsuit alleged. The application is free and is filed through studentaid.gov.¹²

Closed School Discharge cancels remaining federal loan balances for students who were enrolled at the time their school closed or who withdrew shortly before closure. Because every Daymar and successor Hussian campus is now closed, students in that window may qualify.¹²

Neither program covers private loans, and the 2015 Kentucky settlement’s cash restitution and debt-forgiveness windows have long since closed to new claims. For transcripts, the Kentucky Council on Postsecondary Education directs former Daymar students to records held through the Nemonx service.¹¹

1
Bass, Berry & Sims. Attorney General Conway Announces $12.4 Million Settlement With Daymar College
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WDRB. Kentucky Attorney General Announces $1.2M Settlement With Daymar College
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WBKO. Beshear: Daymar to Refund $1.2 Million to 3,500 Former Kentucky Students
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AACRAO. For-Profit Daymar College to Settle With Ex-Students
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WKYU FM. Daymar to Refund $1.2 Million to Former Kentucky Students
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Courier-Journal. Students Sue Daymar College Over Lies
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WPSD Local 6. Former Daymar Students Will Be Able to Sue School
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WBKR. Daymar College Expecting to Close Owensboro and Madisonville Campuses
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Higher Ed Dive. For-Profit Hussian College Abruptly Shuts Down
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ACCSC. Hussian Colleges Final Withdrawal Letter
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Kentucky Council on Postsecondary Education. Transcript Contacts for Closed Institutions
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Federal Student Aid. Student Loan Forgiveness