Ending Forced Arbitration at For-Profit Colleges

(The following blog was written by AAJ Communications Intern Harley Payne)

For-profit colleges have been under much scrutiny of late, and for good reason. Stories of unlawful recruitment and scammed students plague this industry. Last November, the New York Times published a three-part series on the corporate bullying tactic known as forced arbitration, devoting significant space to the challenges facing students who hope to hold these colleges accountable in court. The stories of students who were misled in what a for-profit college could provide—and who then were kept out of court and forced into a system of arbitration that heavily favored the schools they were trying to hold accountable—are unfortunately, far too common.

Jacob had always been told that investing in education was a safe bet. So when he heard about the technical training for a computer certification exam offered at for-profit college United Education Institute, he thought that the steep price of the training would pay high dividends down the road. But unfortunately, UEI did not deliver to Jacob the product that he was promised. On the first day of class he was surprised to walk into a classroom full of half-broken computers, old textbooks written for an earlier version of the exam, and a group of equally stunned students.

The course, taught by an admittedly inept instructor, eventually left Jacob with nothing more than a $16,000 student loan and woefully unprepared to take the computer technician certification exam. He told Buzzfeed in a story published in March, “I invested my time, my money, and all of my efforts into this class. I learned nothing."

Feeling cheated out of his money and the opportunity for a better life, Jacob and some of his classmates tried to band together to file a class-action lawsuit against the university for its false promises and misrepresentations. But Jacob and his classmates never had their day in court.

Jacob’s lawyer told him that buried in the fine print of his enrollment forms was a forced arbitration clause that required him to settle all grievances through arbitration. The arbitrator—a corporate defense attorney—was selected by UEI, and eventually ruled in their favor and against Jacob.

Forced arbitration is everywhere; credit card companies, cellular service providers, and car dealerships all regularly employ forced arbitration clauses in contracts and agreements. In the case of for-profit colleges though, forced arbitration is more sinister in who it affects. So often the people that are taken advantage of by these for-profit institutions are minority and low-income individuals. Those that already have found the deck stacked against them cannot afford to bear a heavier burden.

Last month the Department of Education proposed a new rule that will limit the use of forced arbitration in for profit schools. AAJ has joined consumer advocacy groups in support of the proposal, with calls to go even further in ending the use of forced arbitration in for-profit colleges. Until they do, these colleges will continue to employ tactics that tip the scales in their favor and deny students their right to justice.