CONSUMERIST: Will New Owner Of Everest University, WyoTech Continue With Old Owner’s Sketchy Practice?

Career College Central Summary:

  • When students apply to one of the for-profit schools owned by Corinthian Colleges Inc., they sign away their right to seek any legal action against the company if they’re wronged. Now that CCI is selling off 56 of its Everest and WyoTech campuses, the new owners have a chance to end this anti-consumer practice, but will they?
  • For the second time since November, when embattled CCI announced it was selling these campuses to Education Credit Management Corporation – purchasing under the name Zenith Education Group Inc. – consumer advocates are warning the federal government that the deal could be dangerous to current and future students if new buyers are allowed to continue using binding mandatory arbitration clauses in student enrollment documents.
  • Fair Arbitration Now, a group of more than 70 consumer, labor, legal and community organizations, sent a letter [PDF] to the U.S. Department of Education urging the agency to ensure that the legal rights of students are fully restored in ECMC’s $24 million acquisition of the CCI campuses by barring the nonprofit company from using arbitration clauses.
  • In the letter, the groups warn the Dept. of Education that if ECMC – a nonprofit debt collector and loan servicer – is allowed to continue the use of arbitration clauses, the company could continue to perpetrate the same “aggressive recruiting and sleek marketing ploys” previously used by CCI while also shielding themselves from being held accountable for actual and potential wrongdoing.
  • The use of arbitration clauses have skyrocketed by companies since 2011, when the U.S. Supreme Court affirmed that it was perfectly okay for companies to take away a consumer’s right to sue or their ability to join other wronged consumers in a class action case by inserting a paragraph or two of text inside lengthy contracts.
  • “Increasingly, Corinthian and other for-profit colleges have buried terms in their enrollment contracts that eliminate students’ constitutional rights to legal protections and access to the federal and state courts,” the letter states. “Instead, according to the enrollment terms, students with legal claims must resolve the disputes in secret and often costly arbitration proceedings.”

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CONSUMERIST

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