United Education & Software, an Encino-based trade school operator, said it and a Minnesota student loan agency agreed to suspend any legal action against each other until the U. S. Department of Education makes a final decision about whether one of United Education's schools should be eligible for a student loan program.
The Minnesota group is the Higher Education Assistance Foundation, a private, nonprofit agency in St. Paul that had guaranteed student loans for those enrolled in United Education & Software's Los Angeles-based National Technical Schools, which offers a mail-order computer study program.
The source of the dispute was an Education Department audit which found that National Technical Schools didn't qualify for federally guaranteed student loans because its courses were too short, students were academically unprepared, and it didn't make proper refunds on loans when students dropped out. But the federal Department of Education hasn't made a final decision on what action should be taken against National Technical Schools.
For the moment, United Education & Software has agreed not submit any new National Technical Schools student loan applications to the Minnesota agency, and it discontinued a lawsuit against the agency. The Higher Education Assistance Foundation agreed to postpone any possible action against the school until a final decision is made by the U. S. Department of Education.
As a result of the audit, the California Student Aid Commission, a state agency that administers the federal student loan program, and the Minnesota agency, in separate actions barred National Technical Schools from receiving new federal loan money. A U. S. District Court in Los Angeles last month granted a temporary restraining order preventing the California agency from continuing the ban until a hearing, which is scheduled for Thursday.