Project on Predatory Student Lending v. Department of Justice

Overview

The Project on Predatory Student Lending is challenging the federal government’s refusal to provide documents about Education Management Corporation (EDMC)’s recruiting practices. These documents are critically important to former students of EDMC-owned schools such as the Art Institutes and Brown Mackie chains, as they will help students prove how they were defrauded. They will also inform the public about the government’s oversight of the practices of for-profit college companies. Public Justice is co-counsel in this case.

Background

The Project on Predatory Student Lending is seeking documents from the federal government that shed light on for-profit college giant Education Management Corporation (EDMC's) recruitment practices. EDMC runs four large chains of for-profit schools, including the beleaguered Art Institutes. In 2011, the federal government, along with several states, sued EDMC, alleging that it violated state and federal law and then lied about it to get government funding. The government claimed that to maximize enrollments, EDMC illegally paid its admissions employees based on the number of students they could enroll, encouraging a “boiler room’ style sales culture” that focused exclusively on the volume of new students each recruiter could sign up, rewarding top sellers with bonuses and gifts.

The lawsuit settled in 2015 for $95.5 million - less than one percent of the more than $11 billion in taxpayer-funded federal student grants and loans that the government alleged EDMC had received. The settlement did not relieve students of any of the federal student loan debt they took on, but as part of discovery in the lawsuit, EDMC produced a lot of documents that the Project believes will shed light on the corporation’s recruitment practices. These documents are public records, held by the Department of Justice.

Former students of the Art Institutes and other EDMC-owned chains want these documents to help prove that they were defrauded and are entitled to relief on their student loans. Because these documents have been kept secret — and because EDMC uses forced arbitration clauses to drive students out of the public court system — borrowers seeking debt relief often have little but their own personal experiences to support their claims of misconduct. The Project filed a freedom of information request, and is litigating the government’s denial of that request in Project on Predatory Student Lending v. Department of Justice. The Project also moved to intervene in the lawsuit the government settled with EDMC, to challenge the government and EDMC’s efforts to keep the documents secret because these documents are public records critical to low-income student loan borrowers’ fight for the relief they deserve.

Case Updates

Update | Project on Predatory Student Lending Statement on Proposed Sale of EDMC to Dream Center Foundation

EDMC’s conversion to nonprofit status raises critical questions, including how the corporation intends to ensure positive student outcomes once it is no longer subject to gainful employment regulations.

Update | Project on Predatory Student Lending Sues Federal Government For Withholding For-Profit College Corporation’s Recruitment Records

On February 14, the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School filed a Freedom of Information Act (FOIA) lawsuit, challenging the government’s refusal to provide documents shedding light on for-profit college giant Education Management Corporation (EDMC)’s recruitment practices.

Update | Challenge to Secrecy of Recruitment Records from For-Profit Education Company

The Project on Predatory Student Lending of the Legal Services Center of Harvard Law School and Public Justice asked a federal judge on Friday, December 16, for access to documents that are likely to reveal for-profit college giant Education Management Corporation (EDMC)’s recruitment practices.

“The most palpable way that this will assist students is in getting their federal student loan debt canceled; there is a significant, broader public interest here.”

Project on Predatory Student Lending Attorney, Amanda Savage

Case Documents

04/12/2018

Department of Justice Surreply in Opposition to Plaintiff's Summary Judgment Motion

On April 12, 2018, the Department of Justice filed a surreply in opposition to the summary judgement motion.

04/12/2018

Department of Justice Surreply in Opposition to Plaintiff's Motion to Strike

On April 12, 2018, the Department of Justice filed a surreply in opposition to the motion to strike.

07/09/2018

Order Granting in Part Motion for Summary Judgment

The Court ordered the Department of Justice to produce a limited set of responsive documents.

Coverage

DOJ Must Give Harvard FOIA Docs On For-Profit College | Law360

A Pennsylvania federal judge ruled Monday that the U.S. Department of Justice must turn over some of the documents a Harvard Law School legal clinic had sought from a whistleblower lawsuit over a struggling Pittsburgh-based for-profit college provider’s student recruitment and loan policies.

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These Students are Suing Their For-Profit School | Vice

For-profit colleges and universities have received increased scrutiny in recent years for their part in helping to drive up the level of U.S. student debt, which now tops $1.3 trillion, according to the Federal Reserve Bank of New York.

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In EDMC Sale, Ties to For-Profit Education to Face Scrutiny | Pittsburgh Post-Gazette

Last year, an “extremely enthusiastic” charitable nonprofit foundation based in India approached Education Management Corp. with an offer.

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