Challenge to Government Withholding of EDMC Recruitment Records

The Project on Predatory Student Lending and Public Justice are challenging the federal government’s refusal to provide documents shedding light on Education Management Corporation (EDMC)’s recruiting practices. These documents are critically important not only to former students of EDMC-owned schools (such as the Art Institutes and Brown Mackie chains), but also to the public at large.

Background


The Records Sought by the Project

The Project on Predatory Student Lending is seeking documents from the federal government that shed light on for-profit college giant Education Management Corporation (EDMC)’s recruitment practices.

EDMC, a corporation that has been closely associated with Goldman Sachs for years, runs four large chains of for-profit schools, including the beleaguered Art Institutes. In 2011, the federal government, along with several states, sued EDMC, alleging that it violated state and federal law and then lied about it to get government funding. The government claimed that, to maximize enrollments, EDMC illegally paid its “admissions employees” based on the number of students they could enroll; “created a ‘boiler room’ style sales culture,” the “relentless and exclusive focus” of which was “the number of new students” each recruiter could sign up; taught its recruiters to exploit prospective students’ vulnerabilities; and rewarded those who recruited the most students with bonuses, extra time off, vacations, and gifts.

The lawsuit eventually settled in 2015 for $95.5 million, less than one percent of the more than $11 billion in taxpayer-funded federal student grants and loans that the government alleged EDMC received between July 2003 and the suit’s filing. The settlement did not relieve students of any of the federal student loan debt they took on to attend EDMC-owned schools. But as part of discovery in the lawsuit, EDMC produced a lot of documents that the Project believes will shed light on the corporation’s recruitment practices.

The Project’s Efforts to Obtain These Records

Months ago, the Project filed a Freedom of Information Act (FOIA) request with the Department of Justice (DOJ), seeking access to these documents. DOJ claimed that it couldn’t release the documents (in part) because it said there was a court order preventing it from doing so. The Project disagreed. So, together with Public Justice, the Project asked the court that issued the order to clarify that the order does not, in fact, prevent DOJ from releasing the documents.

In addition to seeking clarification of the court order, the Project has filed a lawsuit challenging DOJ’s denial of its FOIA request, and its assertion that the public has no right to these important documents.

Why Students and the Public Need These Records

Federal regulations allow student loan borrowers to seek cancellation of their federal student loans by showing that their school violated state law. Former students of the Art Institutes and other EDMC-owned chains thus want the documents from the earlier lawsuit to help prove that they were defrauded, and are entitled to relief on their student loans. Because these documents have been kept secret—and because EDMC uses forced arbitration clauses to drive students out of the public court system—borrowers seeking debt relief often have little but their own personal experiences to support their claims of misconduct.

The Attorney General of Minnesota—one of the states that participated in the case—expressed support for the Project’s efforts, stating that the information requested by the Project “could aid students in their efforts to obtain loan forgiveness from the United States Department of Education, which would unburden them from thousands of dollars of debt.”

The Project has made a significant effort to obtain these documents—filing a freedom of information request, litigating the government’s denial of that request, and moving to intervene to challenge the government and EDMC’s efforts to keep the documents secret—because the documents are critical to the Project’s advocacy on behalf of low-income student loan borrowers. The documents will help the Project seek relief for former students of EDMC-owned schools; inform the public about the practices of for-profit education companies and the government’s oversight of those companies; and advocate for policies that will protect low-income student loan borrowers.

Project on Predatory Student Lending

The Project on Predatory Student Lending fights for low-income borrowers, representing students and families who have experienced unfair, deceptive, and illegal conduct at the hands of for-profit colleges. In addition to litigating on behalf of its clients, the Project has advocated for policy reforms to increase accountability in the for-profit industry.

Public Justice

Public Justice pursues high impact lawsuits to combat social and economic injustice, protect the Earth’s sustainability, and challenge predatory corporate conduct and government abuses. For two decades, Public Justice has been exposing and preventing excessive secrecy in our nation’s courts. Public Justice has unsealed evidence of dangers to public health and safety, helped injury victims oppose over-broad protective orders, and educated the public about the dangers of litigation conducted behind closed doors.