In the Hot-seat: For-Profit Education

September 25, 2012

A Senate committee unveiled a report (pdf)  at the end of July regarding an investigation of the for-profit higher education industry. See 2012 WLNR 15997648. For-profit colleges have been subject to intense criticism in recent years. Primary criticisms focused on the high cost of such schools, student debt load and default rate, high dropout rates, inferior quality of education, poor employment prospects, and aggressive recruiting methods. The for-profit industry argues that their programs provide a valuable opportunity for people, often non-traditional students, with family and work obligations, that might otherwise be unable to obtain higher education.

Former students and employees also recently filed several lawsuits. Claims in these suits include whistleblower claims that schools illegally paid recruiters based on how many students they enrolled, and misrepresentation and fraud claims by former students in regards to accreditation prospects, and graduation and placement rates.

This search in WestlawNext delivers excellent results:

student allegations of fraud misrepresentation against proprietary schools

In All State and Federal materials, I get 24 cases, and 97 secondary sources with this search. The first case involves a claim against Brown Institute for “educational malpractice.” One of the headnotes indicates that this case might be directly on point for the types of cases we are looking for here:

Students’ allegations that private, for-profit, proprietary trade school failed to deliver on specific promises and representations regarding its computer program, to the extent claims did not challenge the quality of education provided by school and did not involve an inquiry into nuances of educational processes and theories, stated claims against school for fraud, misrepresentation, or breach of contract.
Alsides v. Brown Inst., Ltd., 592 N.W.2d 468 (Minn. Ct. App. 1999)

The second case also looks right on point. The synopsis in Jackson v. Culinary Sch. of Washington, 788 F. Supp. 1233 (D.D.C. 1992) indicates that this case involves former students of a now defunct culinary school seeking “declaratory and injunctive relief against the Secretary of Education, lenders, Guaranty Associations, and the Student Loan Marketing Association, arising out of allegations that the school fraudulently misrepresented its facilities and educational program, and thereby fraudulently induced students to take out guaranteed student loans.”



I decided to check out the Appellate Brief results as well. In the first few Briefs results I see the following:

Brief for Defendants-Appellees the United States and the Higher Education Assistance Foundation, Eddie BARTELS, Alethia Pinkney, Shirley Travis, Leonie Smart, Mary L. Manley, Doretha Young, Ruby C. Carr, Alfreda C. Bantum and Vera Burson, Individually and on Behalf of all Others Similarly Situated, Plaintiffs-Appellants, v. ALABAMA COMMERCIAL COLLEGE, INC., d/b/a Riley Training Institute of Savannah, Waycross and Brunswick, Georgia, Richard Riley, Secretary, U.S. Department of Education, in his official capacity, the Higher Education Assistance, 1994 WL 16508084 (C.A.11)

Brief for Appellee Educational Credit Management Corporation, Vanessa ARMSTRONG, Plaintiff-Appellant, v. ACCREDITING COUNCIL FOR CONTINUING EDUCATION & TRAINING, INC., et al., Defendants-Appellees., 1998 WL 35240315 (C.A.D.C.)

Brief in Opposition for Respondents Educational Credit Management Corporation and California Student Loan Finance Corporation and Bank of America, N.A. Vanessa ARMSTRONG, Petitioner, v. ACCREDITING COUNCIL FOR CONTINUING EDUCATION AND TRAINING, INC., et al., Respondents., 1999 WL 33633044 (U.S.)

These briefs, and in fact, nearly all of the briefs in the first 20 results seem to involve former student allegations against proprietary schools regarding misrepresentation, fraud, or breach of contract.



There are promising results from law reviews, ALR, and AMJUR:

Dreams Protected: A New Approach to Policing Proprietary Schools’ Misrepresentations, 89 Geo. L.J. 753, 790 (2001)

Liability of Private Trade School to Student, 22 Am. Jur. Proof of Facts 3d 411

Liability of private school or educational institution for breach of contract arising from provision of deficient educational instruction, 46 A.L.R.5th 581

Aaron N. Taylor, “Your Results May Vary”: Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations, 62 Admin. L. Rev. 729 (2010)

We will no doubt continue to see for-profit institutions in the news in the future. There seems to be no lack of discussion in secondary sources on the topic, and the recent senate report certainly indicates that the practices of these schools are under the microscope.




On a related note, former law students have also gotten press recently by filing suit against their respective law schools. I noticed one of those cases in the results of my earlier search – Rodi v. S. New England Sch. of Law, 532 F.3d 11 (1st Cir. 2008), along with the lower court decision available at 389 F.3d 5 (1st Cir. 2004). That case involved a student alleging misrepresentation regarding accreditation. Other, more recent suits involve claims that schools provided misleading employment data. I found some documents from these cases in the trial court documents:

Alexandra GOMEZ-JIMENEZ, Scott Tiedke, and Katherine Cooper, on behalf of themselves and all others similarly situated, Plaintiffs, v. NEW YORK LAW SCHOOL, and Does 1-20, Defendants., 2011 WL 4867655 (N.Y.Sup.)

John T. MACDONALD Jr., Chelsea A. Pejic, Shawn Haff, and Steven Baron, Plaintiffs, v. THOMAS M. COOLEY LAW SCHOOL and Does 1-20, Defendants., 2011 WL 5061950 (W.D.Mich.)

The case against Cooley Law School has been dismissed, as indicated by the decision available at 2012 WL 2994107. The most recent decision in the Gomez-Jimenez case is available at 36 Misc.3d 230, where the court also granted a motion to dismiss by the school.