AAJ Comments on Department of Education’s Proposed Rule Allowing For-Profit Universities to Force Students into Arbitration

Washington, DC — The American Association for Justice (AAJ) recently submitted comments on the Department of Education’s (ED) notice of proposed rulemaking (NPRM) that allows for-profit universities to force students into a rigged arbitration process if a defrauded student attempts to have his or her loan discharged. For-profit institutions get more federal aid (funded by taxpayers) than public or private colleges and universities, but unlike their public or private counterparts, they often use forced arbitration clauses and class action waivers in their admissions contracts.

"When a for-profit university commits fraud, it shouldn’t be allowed to hide behind the fine print to evade responsibility for this behavior. When unscrupulous for-profits force students to arbitrate their claims in a rigged system, the students, their families and all taxpayers ultimately pay the price," said AAJ CEO Linda Lipsen. "This is the latest in a series of ongoing attacks against consumer rights, only this time the targets are those trying to improve their lives through education. The Department of Education should stick to its mission of helping students instead of allowing for-profits to commit fraud and then keep the profits."

AAJ’s comments read, in part:

"In permitting for-profit schools to use forced arbitration in contracts with its students, ED will effectively render the laws and regulations meant to empower students and protect taxpayers meaningless. It will further allow for-profit schools to face zero public accountability when they engage in fraudulent practices.

…Strong accountability standards are paramount in holding for-profit schools in check for clearly fraudulent practices. The public simply cannot stay informed when tens of thousands of claims are being funneled to private, secretive proceedings. It is only through total transparency and full accountability that systemic problems come to light and can be adequately addressed."

AAJ’s full comments are attached here, and AAJ staff is available for more information.

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The American Association for Justice works to preserve the constitutional right to trial by jury and to make sure people have a fair chance to receive justice through the legal system when they are injured by the negligence or misconduct of others—even when it means taking on the most powerful corporations. Visit http://www.justice.org. 

CONTACT Peter Knudsen Email: Peter.Knudsen@justice.org Phone: 202-944-2853