Blowing the whistle on for-profit education

Blowing the whistle on for-profit education

It’s been a busy week in student loan litigation news.  In addition to the CFPB suit against ITT, the The New York Times reports that former employees have sued Harris (Premier Education Group), a for-profit trade school in New Jersey.

The complaint (filed in 2011 and unsealed in late 2013) reads like a catalog of the worst practices alleged by critics of the for-profit industry.  The whistleblowers contend that school officials violated the False Claims Act by taking in federal student aid after knowingly enrolling students who could not pass basic literacy exams, falsifying entrance exam grades, passing students out of courses that the students had failed, forging students’ signatures on loan documents, and misleading students about their career prospects and eligibility to sit for professional licensing exams.  If the plaintiffs are successful, the suit carries significant penalties, including treble damages.

This isn’t the first time Harris has been sued. The Press of Atlantic City reports that in March 2011, thirty-seven former Harris students brought suit against the school. Among the alleged violations? Misrepresentation of accreditation status, which meant that students were not eligible to sit for a required professional licensing exam, rendering their degrees worthless.

Are you sure you want to put that question to a jury?

Did Globe University fire Dean Heidi Weber for poor performance or because she blew the whistle on its deceptive marketing practices?  Heidi Weber sued Globe, a for-profit institution (profiled here by Minnesota Public Radio) in 2011, claiming that Globe fired her in retaliation for raising questions about compliance with accreditation standards in its medical assistant program.  She alleged that they paid commissions to recruiters, inflated job statistics and failed to provide training opportunities promised to students.

This week, a Minnesota jury awarded the former dean of the medical assistant program almost $400,000 for lost wages and emotional distress.  Globe alleges that they fired her for performance, but jurors seemed swayed by evidence of malfeasance, such as the school’s failure to disclose that credits were not as transferable as they had represented and to tell students that promised externships were not available.  They also seemed disturbed by the fact that the school had knowingly enrolled students with felony records, even though those students would not be able to get jobs in a field that requires background checks.  Like the verdict last month against Vaderott, this verdict seems to tap into  deep public disgust with the for-profit industry, fueled at least in part by high default rates on student loans at these schools.