A lawsuit against a defunct for-profit job training chain that operated in Massachusetts and Maryland could help thousands of its former students get their federal student loans canceled.

American Career Institute, or ACI — which had Maryland locations in Columbia, Wheaton and Baltimore — has admitted in a consent judgement to fabricating records and lying about graduation and job placement rates to bilk students out of millions of dollars. The judgment puts to rest a lawsuit filed by Massachusetts Attorney General Maura Healey and makes the case for the U.S. Department of Education to forgive $30 million in federal loans taken out by 4,400 former students in Massachusetts. It might also prove useful to former students in Maryland seeking the same relief.

“Our office has achieved an unprecedented result against a predatory for-profit school that we hope will yield long-overdue relief for thousands of ACI students in Massachusetts,” Healey said in a statement Monday.

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College students can apply to have their federal loans discharged if they can prove a school used illegal or deceptive tactics in violation of state law to persuade them to borrow money for college. The process, known as a “borrower defense to repayment,” is being streamlined by the Education Department, which has been inundated with requests since the collapse of the for-profit giant Corinthian Colleges.

“We are reviewing the consent judgment to determine how it may impact borrower defense claims and eligibility for relief,” Kelly Leon, a spokeswoman for the department, said in an email. “The department remains steadfast in our commitment to protect students and safeguard taxpayer dollars.”

Allegations that Corinthian lied about the success of its programs ultimately led to the loss of its access to federal funding and its bankruptcy. The company’s implosion left thousands of students unsure of what to do with their debt or even where to complete their educations, an outcome that bears a striking resemblance to ACI.

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Before the institute shut down in 2013, it had collected more than $30 million in federal student loan money in a year by charging up to $23,000 in tuition and fees for medical assisting, information technology and other certificate programs.

Prosecutors say administrators inflated job placement rates by excluding students who had withdrawn from class, counting graduates as working in their field when they were not, and counting students working at companies that did not exist. The school also failed to inform prospective student in its medical, dental and security programs that their criminal history could disqualify them from employment in their fields.

Authorities found evidence of school administrators forging student signatures on enrollment forms as well as altering grades and attendance to meet accreditation requirements. The company admitted in court to failing to provide software and other course materials students had paid for, and it acknowledged using unlicensed instructors.

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ACI’s two owners, Robert Payne and Andree Fontaine, are permanently barred from operating or managing career or vocational schools in Massachusetts, though they denied any personal knowledge of wrongdoing. The pair has been fighting the lawsuit since they closed the school’s eight campuses in the face of mounting debt and an inability to access additional credit from their lenders. Though the judgment calls for more than $25 million in penalties and restitution, ACI is not expected to pay because the company is insolvent.

“It didn’t make sense to continue to litigate when the company has no assets,” said Doreen Zankowski, an attorney representing Payne and Fontaine. “The individuals were not a part of this consent judgment.”

In the months following ACI’s closure, 175 former students in Maryland received tuition refunds totaling $215,000. Maryland, unlike Massachusetts, requires schools to post a letter of credit from a bank assuring the availability of cash, and the state has a tuition reimbursement fund. While just 175 of the 846 students who attended ACI schools in the state took advantage of the refunds, state officials say the the pool of money is still available for those who qualify. For more information, visit the Maryland Higher Education Commission website.

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If students took out federal loans to pay for their education, they might also have a strong case to receive debt cancellation, especially since prosecutors in Massachusetts say they believe ACI’s fraudulent practices were pervasive.

Learn more about for-profit colleges:

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