AAJ Statement on Department of Education Proposal to Ban the Use of Forced Arbitration by Scam For-Profit CollegesJune 13,2016
Washington, DC— The following is a statement from American Association for Justice President Larry Tawwater on a proposed rule released today by the U.S. Department of Education that would prohibit the use of forced arbitration and class action waivers by schools receiving federal funds under Title IV of the Higher Education Act of 1965. A recent study by The Century Foundation revealed that 98 percent of for-profit colleges that receive federal funds subject students to forced arbitration, which prevents students from holding educational institutions accountable in court.
“The American Association for Justice commends the Department of Education’s proposal to restore accountability to predatory for-profit colleges by limiting the use of forced arbitration to keep defrauded students out of court – a ubiquitous practice that is itself a scam. The Department’s proposal is an important first step towards empowering students because it allows them to challenge certain unscrupulous practices that seem to pervade the industry, including allegations of fraud and misrepresentation of the quality of educational programs.
“However, because we strongly support efforts to stop the abusive practice of forced arbitration, we are disappointed that the proposed rule as currently drafted fails to ensure accountability for all types of potential harm caused by for-profit colleges. For example, the proposed rule excludes claims related to discrimination, campus sexual assault, and sexual harassment. As this rulemaking proceeds, we encourage the Department to ensure that students are empowered to enforce all of their rights by banning forced arbitration for all claims brought against schools receiving Title IV funds.”