In what may mark an early sign of more favorable treatment of for-profit colleges under the Trump Administration, the U.S. Department of Education has announced delays for colleges to submit appeals or public disclosures relating to gainful employment rules, Inside Higher Ed reported
Gainful employment rules -- created during the Obama Administration -- establish performance standards for for-profit colleges that tie their eligibility for federal student loan funds to their graduates' rate of success in loan repayments after entering the workforce. Republicans and Trump Administration officials have indicated that they will seek to curb or eliminate gainful employment rules.
In the recent announcement, the Department of Education granted roughly three-month delays to for-profit colleges to make filings relating to their gainful employment performance. According to Inside Higher Ed, the Trump Administration's Education Department said in a written statement that it decided to make the new delays to "allow the department to further review the gainful employment regulations and their implementation."
A federal district judge has denied an attempt by a controversial accrediting body to continue its work certifying for-profit colleges seeking to be eligible for federal student loans and grants.
United States District Judge Reggie Walton denied a motion filed by the Accrediting Council for Independent Colleges and Schools (ACICS) that would have blocked the U.S. Department of Education from taking steps to strip ACICS of its recognition as an accreditor for schools seeking the necessary eligibility for federal student loan funding.
In moving to strip ACICS of its accrediting authority in December 2016, then-Education Department Secretary John King wrote that the accreditor had "exhibited a profound lack of compliance" with its responsibilities. ACICS had been the accreditor for more than 200 institutions, almost all of which were for-profit colleges. Among others, ACICS had accredited Corinthian Colleges and ITT Tech, both of which came under federal scrutiny for alleged deceptive practices in enrollment and job placement statistics.
A Harvard Law School clinic is suing the U.S. Department of Justice to obtain documents that may allow for-profit college students to cancel federal student loan debt.
in the Washington Post
, the Law School's Project on Predatory Student Lending is seeking access to sealed filed relating to the federal government's settlement of claims against Education Management Corp., a giant for-profit school company that has operated chains including Art Institutes, Argosy University, Brown Mackie College and South University.
In 2015, EDMC agreed to pay more than $95 million to resolve allegations that recruiters had violated federal regulations by receiving compensation with incentives for securing student enrollments. Some states involved in the litigation were successful in the deal in obtaining forgiveness from EDMC for more than $100 million in outstanding student balances. But the settlement did nothing to provide students with cancellation or forgiveness of federal student loans.
The new Harvard case seeks access to files from the 2015 settlement that may allow students to file "borrower defense to repayment" claims.
According to the Post
, "Attorneys at the Harvard Law clinic say the evidence the Justice Department gathered, specifically recruitment documents, could make it easier for those students to have their claims approved. They filed a Freedom of Information Act request last year seeking access to the files but were told by the Justice Department that there was a court order preventing the release. The Harvard attorneys asked the courts to clarify and said federal prosecutors then changed their position by claiming the information was not subject to the FOIA law."
“When the government settled this case, they hailed it as a victory for students and taxpayers. We are seeking these documents on behalf of students, but also on behalf of taxpayers who are the members of the public who have an interest in these documents,” project attorney Amanda Savage told the newspaper. “There has to be oversight of how public dollars are being funneled toward for-profit corporations.”
For-profit colleges -- with a documented history of poor outcomes for graduates who often become saddled with high debt and limited job prospects -- see a "new day" under the administration of President Donald Trump, according to a New York Times report
Following years of aggressive regulatory oversight by the Obama Administration, for-profit colleges are looking forward to relaxed supervision in the Trump Administration. Prior to becoming president, Mr. Trump settled a fraud lawsuit brought his own for-profit school, Trump University, for $25 million. His choice for secretary of Department of Education, Betsy DeVos, has investments in for-profit eduction ventures.
According to the Times report, "Since Election Day, for-profit college companies have been on a hot streak. DeVry Education Group’s stock has leapt more than 40 percent. Strayer’s jumped 35 percent and Grand Canyon Education’s more than 28 percent. You do not need an M.B.A. to figure out why. Top officials in Washington who spearheaded a relentless crackdown on the multibillion-dollar industry have been replaced by others who have profited from it."
Charlotte School Law, the for-profit school that lost eligibility to federal student loans in January, has submitted a teach-out plan that would allow students to complete their education at Florida Coastal School of Law, the ABA Journal reports
According to ABA Journal, both schools are part of the Infilaw System, which is owned by the private equity firm, Sterling Partners.
"The submitted teach-out plan will be considered by the council of the Section of Legal Education and Admissions to the Bar at its March meeting, according to Taylor’s email. Under the plan, Florida Coastal will disburse Title IV funds, with Charlotte School of Law being the degree-granting institution. It’s expected that the plan will run until December 2019, which is reportedly the last anticipated graduation date of currently enrolled students," the ABA Journal said.
The owner of a California for-profit school chain has pleaded guilty to immigration fraud after being accused of running a "pay-to-stay" scheme involving foreign nationals who would falsely obtain immigration documents allowing them to remain in the U.S. on student visas even though they were not actually students, Inside Higher Ed reports
The U.S. Attorney's Office for the Central District of California announced that the school owner, Hee Sun Shim, 53, agreed to forfeit $465,000 seized by investigators as part of a plea deal in which he faces the potential for a sentence of up to 15 years in prison.
Prosecutors claimed that Shim's four schools collected tuition from and issued immigration documents to individuals who were not genuine students and had no intention of attending classes at Prodee University, Walter Jay M.D. Institute, the American College of Forensic Studies and Likie Fashion and Technology College.
A cosmetology association is suing the U.S. Department of Education over gainful employment rules that tie schools' eligibility to receive federal student loan funds to their graduates' job performance.
Inside Higher Ed reports
that the American Association of Cosmetology Schools, which represents about 750 institution, is seeking in a lawsuit filed last week to obtain relief from U.S. Department of Education gainful employment regulations.
According to Inside Higher Ed, "The organization argues that gainful employment undercounts cosmetology graduates' income because many self-employed workers rely on gratuities and are paid in cash. Many cosmetologists simply underreport their incomes, according to the organization."
Wisconsin Gov. Scott Walker is poised to renew efforts to eliminate oversight of for-profit colleges in the state, according to a report
in the Minneapolis Star-Tribune.
According to the newspaper, the budget that the Republic governor introduced last week calls for eliminating the Educational Approval Board by January 2018.
"The governor proposed getting rid of the board in his 2013-15 executive budget as well, arguing then that doing away with it would lift unnecessary financial and regulatory burdens on for-profit schools," the newspaper said. "Opponents countered that the board plays a key role in overseeing the schools and the Legislature's finance committee ultimately nixed the idea as it revised Walker's budget."
A for-profit college president says he that he was terminated after offering to shelter a homeless student in the school's library on the school's Missouri campus.
The president of Vatterott College, Brian Carroll, told a local television state that the student, who is schizophrenic, had run of medication and lacked shelter when Mr. Carroll made the decision to allow him to stay in the school's library amidst a winter storm in January.
Mr. Carroll said that the student neither stole nor damaged property, but corporate officials at the school discovered that the student had been allowed to stay in the library through surveillance cameras and fired Mr. Carroll for putting college property at risk.
A school spokesman told the television station that the company does not comment on personnel matters.
DeVry University's parent company is agreeing to settle allegations in New York that the for-profit school misled students about the job and salary statistics of its graduates.
In announcing a $2.75 million settlement in which DeVry neither admitted nor denied liability, New York Attorney General Eric Schneiderman said in a statement, "DeVry used misleading claims to lure in students who were simply seeking a college degree, greatly exaggerating job and salary prospects for graduates."
DeVry Group said it was "pleased this matter has been resolved, particularly as DeVry University implements recently announced student commitments and as we continue our focus on investments that directly support our students’ success."
Most of the settlement funds will be used to pay restitution to graduates.
DeVry had previously agreed to settle similar allegations brought by the Federal Trade Commission for $100 million.