Project Attorney Urges Department of Education to Prohibit For-Profit Colleges from Using Forced Arbitration to Hide Fraud and Deception of Students

Project on Predatory Student Lending Attorney Eileen Connor asked the Department of Education to use its current rulemaking process to prohibit colleges participating in the Federal Student Aid program from forcing students to settle disputes against the school through arbitration. Ms. Connor, along with Noah Zinner of Housing and Economic Rights Advocates, is representing the Legal Aid Community and the interests of their clients in the ongoing Negotiated Rulemaking.

Student borrowers who have been harmed by predatory institutions face significant barriers to raising claims and winning relief in arbitration, particularly because most predatory schools’ arbitration clauses prohibit class action suits and group claims, forcing borrowers to go it alone.  The proposal argues that predatory institutions use arbitration—a confidential, non-public dispute resolution process that favors corporations over individuals—as a means to cover up fraud and misconduct, as in the case of Corinthian Colleges. Yesterday, nine Senators made a similar request.

More information about the Negotiated Rulemaking can be found on the Department’s website here.