Project on Predatory Student Lending and Southern Poverty Law Center Assert Voice of Students in Education Corporation of America’s Dispute with Department of Education | Press Release

October 29, 2018

ECA’s Lawsuit Comes Just Days After Judge Ordered Borrower Defense Regulations Into Effect That Banned Forced Arbitration

 

Update: On November 5, 2018, a judge dismissed ECA’s baseless attempt to prevent students from exercising their rights under the Borrower Defense rule.

Update: On October 29, 2018, the Judge granted the Project on Predatory Student Lending of Harvard Law School (Project) and the Southern Poverty Law Center (SPLC) permission to file their requested amicus brief. Last night, October 31, 2018, the organizations filed the brief, to assert the voices of ECA’s 20,000 current students. The organizations detailed ECA’s past misconduct and argued that students would be better off if ECA’s chain of schools ended its run of predatory operations. Read the filed brief here.

BIRMINGHAM, AL (October 29, 2018): Today, two advocacy groups—the Project on Predatory Student Lending of Harvard Law School (Project) and the Southern Poverty Law Center (SPLC) – asked for permission to weigh in on a dispute between Education Corporation of America (“ECA”) owner of several struggling for-profit college chains including Virginia College and Brightwood College and the Department of Education.

Schools operated by ECA have left tens of thousands of students—including students of color, first-time college goers, veterans, and single mothers— with crippling debt and no marketable skills. The majority of programs at schools operated by ECA are not in compliance with the basic guardrails that Congress has placed on the federal student aid programs administered by the Department of Education. Three out of four programs offered by ECA schools do not pass the gainful employment test. Virginia College, one of the chains operated by ECA, has been placed on probation by its accreditor, the notorious ACICS. Another accreditor of for-profit colleges, ACCET, roundly rejected Virginia College’s bid to gain accreditation earlier this year, citing the school’s flagrant failures to provide qualified teachers and sufficient classroom equipment to students, all while misrepresenting the utility of its programs in landing students jobs.

The lawsuit, Education Corporation of America v. DeVos, was filed in the United States District Court for the Northern District of Alabama, where ECA is headquartered. The suit is a hail-Mary attempt at preserving the troubled school’s access to taxpayer money. It asks a federal court to block creditors—including the multiple landlords suing ECA for non-payment of rent—from gaining legal redress against the company. It also asks the court to order the Department of Education to continue providing taxpayer money to ECA in the form of federal student aid.

Notably, ECA filed its lawsuit just days after an Obama-era regulation went into effect. The regulation, which was illegally delayed by the Department of Education under Secretary DeVos, prevents institutions receiving federal money from forcing students to arbitrate their disputes and forbidden them from joining together in collective actions. Schools operated by ECA have a long history of using pre-dispute arbitration contracts against students who have been wronged by its schools.

The Project and SPLC seek to assert the voices of ECA’s 20,000 current students. ECA claims that its lawsuit is in these students’ best interest. But ECA’s track record of failing students by targeting them on the basis of their race for enrollment, and providing a subpar education that leads to exorbitant debt and no marketable skills disqualifies the company from speaking on behalf of students. Students and former students at ECA-operated schools deserve the option of wiping the slate clean.

Although ECA and its owners want to keep the schools running until they can sell them to lenders and cash out, students would be better served by letting this chain of schools end its run of predatory operations. In the event that ECA ceases operations, current students would be able to apply for complete cancellation of their federal student loans, or decide that they want to continue their programs at a different school.

Click here to read the motion.

About the Project on Predatory Student Lending

Established in 2012, the Project on Predatory Student Lending represents former students of predatory for-profit colleges. Its mission is to litigate to make it legally and financially impossible for federally-funded predatory schools to cheat students and taxpayers.

The Project has brought a wide variety of cases on behalf of former students of for-profit colleges. It has sued the federal Department of Education for its failures to meet its legal obligation to police this industry and stop the perpetration and collection of fraudulent student loan debt. Visit

About SPLC:

The Southern Poverty Law Center, based in Alabama with offices in Florida, Georgia, Louisiana and Mississippi, is a nonprofit civil rights organization dedicated to fighting hate and bigotry, and to seeking justice for the most vulnerable members of society. For more information, visit www.splcenter.org.