Durbin, Waters Introduce Legislation to Strengthen Students' Legal Rights
Following the closure of Corinthian Colleges, top Dems in Senate and House introduce CLASS Act to end forced arbitration in student enrollment agreements
[WASHINGTON, DC] - On the heels of the closure of Corinthian Colleges, one of the most fraudulent and harmful for-profit college institutions in U.S. history, U.S. Senator Dick Durbin (D-IL) and U.S. Congresswoman Maxine Waters (D-CA) have introduced legislation designed to strengthen students’ rights and protections under our court system.
The bill, entitled the Court Legal Access & Student Support (CLASS) Act, prohibits any school receiving student aid funding from the Department of Education from including any restrictions on students’ ability to pursue legal claims, individually or with others, against higher education institutions in court.
The CLASS Act is an attempt to end the growing, strategic use of mandatory arbitration and class action waiver clauses in enrollment agreements by Corinthian Colleges and other institutions. If this bill had been law in the last several years, students defrauded by the now-failed Corinthian Colleges would have been able to seek redress from the courts and relief directly from the school.
“For years, unscrupulous for-profit colleges have enriched themselves by devouring billions in federal student loan dollars while leaving students with worthless degrees and a mountain of debt,” said Durbin. “Students have had little to no recourse, unable to hold these companies accountable in court because of the fine print in enrollment contracts. The practices of requiring binding, mandatory arbitration or prohibiting students from seeking a jury trial or bringing class action suits against a company unfairly stacks the deck against students. Our bill would deny Title IV education funding to institutions that use these legal tricks to block students’ rights to have their day in court.”
“This legislation will help put an end to the use of mandatory arbitration clauses in federally funded school enrollment agreements – a trend that does nothing but protect the predatory institutions that are harming our children,” said Congresswoman Waters, the Ranking Member of the Financial Services Committee. “As we have seen with Corinthian Colleges, the for-profit college industry is rife with bad actors that lure potential students into some of the most expensive academic programs, all while knowingly and fraudulently misrepresenting the quality and success of these programs. These schools use mandatory arbitration clauses and other tactics to shield themselves from being held responsible for this wrongdoing. This legislation will take bold action toward eliminating these types of provisions, putting an end to many troubling practices and ultimately giving students’ back the right to their day in court.”
For several years, Corinthian Colleges knowingly engaged in fraudulent conduct at the expense of thousands of students across this country. Specifically, Corinthian misrepresented the quality and success of its programs at the expense of students seeking the opportunity to earn a quality education and a successful career. Compounding these harms, Corinthian Colleges included in their enrollment agreements provisions that limited students access to courts and their ability to hold Corinthian accountable for its misconduct.
Moreover, ECMC, the not-for-profit institution that bought 56 former Corinthian College locations has adopted similar provisions in its enrollment agreements, suggesting that the practice of limiting students’ legal rights through the fine print of enrollment agreements is not only continuing, but is possibly spreading into the non-profit sector.
Additional cosponsors include U.S. Senators Sherrod Brown (D-OH), Barbara Boxer (D-CA) and Al Franken (D-MN) and U.S. Representatives Keith Ellison (D-MN), Earl Blumenauer (D-OR), Eleanor Holmes Norton (D-DC), Raul Grijalva (D-AZ), Judy Chu (D-CA), Charles Rangel (D-NY), Barbara Lee (D-CA), Steve Cohen (D-TN), Elijah Cummings (D-MD) and Mark Takano (D-CA).
The legislation is cosponsored by a number of consumer and student advocacy organizations including the Fair Arbitration Now coalition, the Alliance for Justice, the American Association for Justice, the Center for Justice and Democracy, the Center for Responsible Lending, Consumer Action, the Consumer Federation of America, Consumers Union, the National Association of Consumer Advocates, the National Consumer Law Center (on behalf of its low income clients), the National Association for College Admission Counseling, the National Employment Lawyers Association, The Institute for College Access and Success, Public Citizen, and U.S. PIRG.