October 19, 2023

FTC, New Jersey Charge For-Profit College With Deceptions, Order Student Debts Cancelled

FTC, New Jersey Charge For-Profit College With Deceptions, Order Student Debts Cancelled

The Federal Trade Commission and the state of New Jersey have reached parallel settlements with for-profit Sollers College, under which the school has been ordered to cancel $3.4 million in student debt for about 400 students. Sollers, which has a single campus in New Jersey plus courses online, also must pay a $1.2 million civil penalty imposed by New Jersey in a consent order that names as an additional party Sollers’ founder and president Siba Padhi.

The settlements resolve charges by the FTC and New jersey that Sollers, since at least 2018, has deceived students into enrolling with false claims regarding job placement and the school’s alleged relationships with prospective employers.

The action by the FTC and New Jersey also highlights a new category of abuses by for-profit schools: manipulating so-called “income share agreements” that require a student to pay the school back a percentage of future income in exchange for reduced tuition. The FTC said that Sollers failed to include in these agreements mandatory disclosures required by law, in particular a notice of rights under the Holder Rule, which maintains a consumer’s rights even if a loan or contract is sold to a third party. The settlement cancels all the income sharing agreements issued by Soller.

Sollers offers short-term, certificate, and Masters programs, in fields including information technology, data science, and drug safety. The school, according to the website of the New Jersey Office of the Secretary of Higher Education, is not accredited but is seeking accreditation from the Middle States Commission on Higher Education. Approval by an accreditor that, like Middle States, is recognized by the U.S. Department of Education is required for a college to be eligible for federal student grants and loans.  Thus Sollers students presently are not eligible for federal aid and must fully finance their own educations (unless they get help from employers or obtain a Sollers “Women’s Scholarship,” which the school calls “A unique scholarship only women can apply for” that covers “at least a portion of their fee”).

In a statement released Wednesday, Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said, “Not only did Sollers College use deceptive advertisements to attract students, it trapped them in multi-year income share agreements that broke the law by leaving out important borrower rights.”

According to a complaint filed by the FTC in federal district court in New Jersey on Wednesday, Sollers used its website, social media, and emails to make false claims about supposed partnerships with major employers in information technology, clinical research, and drug safety. According to the complaint, “Sollers falsely claimed that its partnerships with prominent employers, such as Pfizer, Weill Cornell Medicine, and Infosys, resulted in jobs for its graduates at those companies. In reality, many of the businesses featured on Sollers’ website had no partnership with the school at all.” At least two of those employers, according to the FTC complaint, last year sent Sollers cease and desist letters demanding that Sollers remove those company logos from the Sollers website.

The FTC complaint further charges  that, since at least 2018, Sollers advertised that the vast majority of its graduates were “placed” in jobs. For example, the Sollers website claimed, “90% of our students are placed within 3 months of graduation.” Elsewhere, Sollers claimed a job placement rate of 80 percent, 82 percent, or “near perfect” But, the FTC says, the school’s own data suggests that the job placement rate for graduates of its Life Sciences program is as low as 52 percent.

According to a statement issued by New Jersey Attorney General Matthew J. Platkin, his office began investigating Sollers in late 2020, after a referral from the District of Columbia attorney general’s office and “upon receipt of consumer complaints.” Platkin’s office says it worked in collaboration with the FTC on the investigation.

Under the settlement agreement, Sollers also has agreed not to make false claims in its advertising.

In October 2021, the FTC announced that its commissioners had voted unanimously to exercise long-unused powers to warn for-profit colleges against making misrepresentations to students — and that the Commission was prepared to impose major fines on schools for continued abuses.