04.02.19

Durbin: End Forced Arbitration & Give Students Defrauded by For-Profit Colleges Their Day In Court

WASHINGTON – U.S. Senator Dick Durbin (D-IL), in a Senate Judiciary Committee hearing today, discussed the need to end the use of forced arbitration clauses, a legal strategy used by many industries, including the for-profit college industry, to restrict people’s ability to pursue legal claims in court.  Durbin, along with U.S. Representative Maxine Waters (D-CA-43), has introduced the Court Legal Access & Student Support (CLASS) Act, a bicameral bill designed to strengthen students’ ability to hold for-profit colleges accountable in court for their misconduct.  It prohibits any school receiving Title IV student aid funding from placing restrictions on students’ ability to pursue legal claims, individually or with others, against higher education institutions in court.  Paul Bland, the Executive Director of Public Justice and a witness at today’s hearing, supported Durbin’s bill as an important step forward to help defrauded students and address misconduct in the for-profit college industry.

“So far we’ve paid out $535 million in student debt relief for students who were defrauded by for-profit schools who had no recourse in court. They had an arbitration clause which meant the average student wasn’t going to challenge the school,” Durbin said. “If for-profit schools are going to be taking college students loans to facilitate the education of these students, they shouldn’t be imposing mandatory arbitration clauses on them.”

Video of Durbin’s remarks is available here.

Audio of Durbin’s remarks is available here.

Footage of Durbin’s remarks is available here for TV Stations.

The CLASS Act aims to end the strategic use of mandatory arbitration and class action waiver clauses in enrollment agreements by for-profit colleges. Legitimate non-profit colleges and universities do not include mandatory arbitration clauses in their enrollment agreements, but these clauses are a hallmark of the for-profit college industry. If this bill had been law in the last several years, many students defrauded by Corinthian Colleges and other now-defunct for-profits would have been able to seek redress directly from their school instead of being forced to seek relief from the taxpayers for their student debts. 

The CLASS Act is supported by groups including the American Association for Justice, the Center for Justice & Democracy, Center for Responsible Lending, Consumer Action, Consumers for Auto Reliability and Safety, the Institute for College Access and Success, Public Citizen, 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 National Student Legal Defense Network, Veterans Education Success, and Young Invincibles.

The CLASS Act is also part of Durbin’s comprehensive consumer protection bill the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2019, also known as the PROTECT Students Act. The bill will help safeguard students, including servicemembers and veterans, and taxpayers from predatory and anti-student higher education practices and ensure that higher education meets the needs of hard-working students. The bill was introduced last week with Senator Maggie Hassan (D-NH).