Durbin Statement on Apollo Announcement That Universiry of Phoenix Will No Longer Use Mandatory Arbitration Clauses
[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) today expressed cautious optimism about the University of Phoenix’s commitment to eliminate the use of mandatory arbitration clauses in its student enrollment agreements. Durbin has long opposed the use of mandatory arbitration clauses by for-profit colleges, including in a recent op-ed for The Hill in which Durbin urged the Department of Education to protect the interests of students by implementing a full ban of mandatory arbitration clauses as a condition of receiving federal funding.
“Mandatory arbitration clauses are unfair to students and their families. Many for-profit schools have promised to end these unfair practices and failed to deliver. We will watch carefully to see if Apollo will truly change its practices and protect its students,” said Durbin who noted that the “new Apollo” is going private and will no longer be required to disclose critical information like CEO compensation and pending lawsuits.
Mandatory arbitration clauses are common in for-profit college enrollment contracts but are almost never used by not-for-profit schools. These clauses reduce transparency and accountability for for-profit colleges and force students who have been victimized by fraudulent or abusive conduct into secret arbitration proceedings where the deck is stacked against the student. Durbin first called for the Department of Education to crack down on the use of mandatory arbitration in the immediate aftermath of the collapse of the for-profit Corinthian Colleges Inc. as a condition of the Department approving the sale of Corinthian to ECMC. In April of last year he introduced the Court Legal Access and Student Support (CLASS Act) to ban the practice by all Title IV institutions and in a February 11 he sent a letter to the Department of Education with eight of his colleagues asked the Department to use its authority to act. That letter can be found HERE.
An investigation by the Senate Committee on Health, Education, Labor, and Pensions found that of the twenty-seven enrollment agreements produced to the committee by for-profit education companies, twenty-one contained a clause that required students to go through a process of mandatory binding arbitration. Not only does forced arbitration hurt individual students who cannot obtain meaningful recourse directly from wrongdoers, but it also prompts those students to seek relief from the Department of Education through taxpayer dollars.