December 9, 2019

DeVos-Backed College Operator Gets Court OK To Strip Students Of Their Rights

DeVos-Backed College Operator Gets Court OK To Strip Students Of Their Rights

Betsy DeVos has been under pressure from congressional Democrats and others because of evidence that her Department of Education facilitated deceptions against students by a failed predatory college operation, Dream Center Education Holdings. At the same time, she’s taken heat, and been held in contempt by a federal judge, because the Department has illegally pursued debt collection against students ripped off by another collapsed for-profit, Corinthian Colleges.

Perhaps because of these pressures, including a pending lawsuit by former Dream Center students, DeVos agreed last month to forgive some loans by some students whom the Dream Center deceived in 2018 by telling them that their campuses were accredited, when in fact they were not.

But despite that action by DeVos, a lot of students who attended Dream Center schools, including under their prior owner, for-profit EDMC, still owe a lot of money for the overpriced, often low-quality educations they received.

Now a federal judge has approved a plan by Studio Enterprise, the shadowy new operators of the remaining Dream Center schools, to forgive some non-federal student loans — loans made in 2018 to those students deceived about accreditation — totaling about $2 million, that Studio obtained in the deal.

But there’s a catch: The approximately 1500 deceived former students, in order to get their loans wiped off the books, must agree to surrender all rights to sue Studio, not just over the phony claim of accreditation, but over any prior abuses.

An order issued late last week by U.S. District Judge Dan Polster, who sits in Cleveland, granted a motion by Studio allowing it to present broke students with that coercive deal.

These former students, most of whom presumably have no lawyer, will have 30 days or less to evaluate a complicated legal document and decide whether to take or leave this troubling offer.

Judge Polster is a busy man; his docket includes the massive opioid litigation. But it’s not as if he wasn’t alerted to the problems with Studio’s proposal.

Polster approved the plan over the strenuous objections of Thomas Perrelli, the corporate lawyer who was appointed to oversee the 2015 settlement of fraud claims brought against EDMC by state attorneys general on behalf of defrauded students, a deal under which EDMC agreed to pay some $100 million and reform its practices. Perrelli told the court that forcing students to renounce their rights to seek redress for injuries they suffered unjustly harms students and principles of consumer protection. But Judge Polster shut Perrelli down without really explaining why. Worse, he granted Studio’s further request to bar Perrelli, the state attorneys general, the students’ lawyers from the non-profit law firm Student Defense, and others from seeking justice for these students.

Four years after EDMC’s abuses against students were confirmed in the settlement of a major federal and state fraud case, and 19 months after Dream Center’s abuses running the same chains of schools were first exposed, students who attended these schools are still suffering at the hands of slick operators, the latest being for-profit Studio, which pleads that it doesn’t even own the surviving schools, it just makes money off them, even though we exposed almost a year ago that the non-profit “foundation” that bought the schools, with the active support of the DeVos Department, was a creature of Studio’s owners, Colbeck Capital Management.

It’s not surprising that capitalists, invited into the education market, want to maximize profits, but it is disgraceful that so many of them are willing to trash the rights and harm the financial futures of people who seek to improve their lives through education. It’s even more disgraceful that the U.S. Department of Education, whose staff always includes revolving door opportunists who were or aim to be for-profit college executives, has long tolerated such abuses, and that under Betsy DeVos and her top higher education aide, Diane Auer Jones, the Department actually enables such awful predatory behavior.