Last summer, in a consent judgment that ended a lawsuit against the school by state prosecutors , former executives admitted that ACI lied about job placement rates, hired unqualified instructors, and even falsified students’ grades.

State law enforcement officials have said the school was a fraud, raking in tens of millions of dollars in federal college loans while peddling essentially worthless degrees.

Thousands of students who took out federal loans to attend the American Career Institute, a defunct for-profit school that once ran five campuses in Massachusetts, will have their debts automatically discharged, the US Department of Education said Friday.


Now, federal education officials will waive or refund a total of about $30 million in federal loans issued to some of the roughly 4,500 students who attended ACI in Massachusetts between 2010 and its closure in 2013.

Students whose debts have been discharged will be notified by mail beginning next week, the Education Department said in a press release.

The judgment last year called for more than $25 million in penalties, fees, and restitution, but ACI was insolvent was not expected to pay.

ACI offered courses on subjects ranging from Web design to medical billing at campuses in Braintree, Cambridge, Framingham, Springfield, and Woburn.

The state lawsuit against ACI was first brought by former Attorney General Martha Coakley in 2013 and continued by current Attorney General Maura Healey.

“ACI was a predatory, for-profit school that admitted to breaking Massachusetts law and lying to its students. Today, these students are finally getting the relief they deserve,” Healey said in a statement Friday.

Healey was joined at a press conference Friday by Senator Elizabeth Warren.

“Today’s announcement means 4,500 Massachusetts students who were cheated by this predatory for-profit school will finally see their student debt nightmare come to an end,” Warren said in a statement.


According to the earlier judgment, prospective students who visited ACI campuses were heavily pressured to enroll and apply for federal loans on the spot. They were then immediately seated in ongoing courses so the school could immediately receive the loan proceeds — which accounted for 90 percent of the school’s revenue, prosecutors said.

ACI charged up to $23,000 a year, but admitted in court that many classes were taught by unqualified instructors, including people who were students in other courses. The company also acknowledged it failed to provide books students had paid for, and sent them to internships that involved little more than photocopying, and other unskilled administrative work.

Dan Adams can be reached at daniel.adams@globe.com. Follow him on Twitter @Dan_Adams86.