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Laws

Lawsuit Against For Profit Colleges

In March, 2020, a Lawsuit has been filed in U.S. District Court by Xerox Corporation against its former contractor, Ryan Tate, who is currently the President and Owner of For-Profit Colleges Inc. Details: Xerox Corporation, which leases some of its costly laser printers from its contract manufacturer, has sued Ryan Tate Publishing, claiming re-structuring lease and services with a former employee violate clauses of their original agreement. In addition to that, the lawsuit claims that a former employee had access to digital images of some of the most sensitive and classified information at Xerox. Additionally, the lawsuit claims that Mr. Tate did not maintain either a laptop or computer security policy with reasonable measures to prevent the loss or destruction of material.

Secretary Price is concerned that this type of lawsuit might have many implications for the future of higher education. As previously reported by The New York Times Higher Education Secretary William English emphasized that for-profit colleges were very troubling due to their deceptive marketing and fraudulent claims. “For-profit colleges simply do not have a track record of success when it comes to providing quality education,” Mr. English said. “People attending these institutions are likely to encounter deceptive advertising and the vague promise of a quick path to a wonderful career. However, if a person attends a college that is supported by the federal government, there is a better chance that they will get the quality education that they need and deserve.” Mr. William English is also worried that the lawsuit may open the door for other disgruntled students to file similar lawsuits against other for-profit colleges.

At the time of this writing, the United States Department of Education has opened an official investigation into the misleading advertisements and fraudulent promises made by the Corinthian College for-profit education system. The complaint filed by the Consumer Financial Protection Bureau with the Federal Trade Commission against the college says that the Corinthian falsely advertised its degree programs, failed to disclose material facts about its accreditation status, and targeted prospective students based on race, nationality, and gender in a calculated effort to defraud the government and its members. In the complaint, the Bureau asks that the government take action against the deceptive nature of the Corinthian College for-profit education system. Specifically, the complaint says that the defendant must refund all government student loans that were obtained by the for-profit college through the Corinthian system and must make genuine efforts to recruit and train competent employees in core academic areas.

The United States Attorney General is also looking into whether or not the Corinthian College violated any federal laws regarding federal aid. A press release from the General Services Administration (GSA) announcing the investigation indicates that fraud by for-profit schools regarding the distribution of federal financial aid may result in “a net loss for the United States economy.” Specifically, GSA stated that “fraud related to enrollments that are not legitimate – that is, the enrollment of students who did not intend to pursue a college education – may result in a net decrease in the cash and services received by the Government as a result of the for-profit school’s inability to adequately fund its program.” A similar lawsuit was filed against the University of Phoenix, another for-profit school.

Corinthian Colleges has already taken steps to remedy the problems cited in the complaint. Corinthian is in the process of reviewing its contracts with its affiliates and is currently negotiating a contract with the United States Department of Education to cover its costs associated with the investigation. Meanwhile, it has hired an attorney general’s investigator to look into the allegations of fraud and has instructed its own counsel to review the financial aid application procedures used at its for-profit colleges. It is also anticipated that a lawsuit will be filed in the near future against the government over the regulations regarding for-profit colleges receiving federal financial aid.

There is no doubt that the lawsuit will be lengthy, drawn-out, and expensive. But the purpose of such a lawsuit is not only to seek redress from fraudulent acts by for-profit colleges, but to also to protect the interests of the American people. As the attorney general of the United States said in a statement addressing the lawsuit: “The mission of the Department of Education is to ensure that all students have the opportunity to pursue a higher education that will further their careers and contribute to the economic well-being of our nation.” The lawsuit will undoubtedly strengthen the hand of the attorney general in pursuing this goal.

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