Mixed Ruling on For-Profit Rules

Massachusetts for-profit college friends and foes have something to cheer in the federal court decision.

January 28, 2016

A federal judge in Massachusetts this week issued a mixed ruling in a case challenging tougher regulations on for-profit colleges enacted by that state’s attorney general.

The Massachusetts attorney general’s office, which has been among the more aggressive in cracking down on for-profit colleges, largely prevailed in the case as the judge upheld seven of the nine state regulations the for-profit college association in the state had challenged.

But United States District Judge Dennis Saylor sided with the for-profit colleges in ruling that two of the regulations were unconstitutional. Those rules related to how for-profit colleges informed students about the transferability of credits and how they described or advertised the time it could take to finish their programs.

Saylor ruled that both regulations were invalid under the First Amendment. One of the rules prohibited colleges from suggesting that a student can complete a program faster than the actual median completion time, such as advertising that a program can be completed "in weeks." But the judge said that since some number of students actually would be able to complete a course more quickly than the median student, such an absolute ban would prohibit "more speech than is necessary to protect students from deceptive advertisements about program-completion times."

Another rule requires colleges that advertise the transferability of their credits to identify the other institutions with which it has formal transfer agreements and then tell students that it "is aware of no other schools that accept the transfer of its credits." The judge said the second part of that rule was unconstitutional because it might force a college to falsely state that it doesn't know about other transfer options beyond its formal transfer agreements when that isn't the case.

The judge left the remaining regulations, which govern how colleges disclose graduation rates, determine whether students are qualified to enroll, and recruit students, completely intact.

Greg Ferenbach, a lawyer at the Cooley law firm, which brought the lawsuit on behalf of the Massachusetts Association of Private Colleges and Schools, called the ruling “a rare victory of for-profit schools in that their free speech and due process rights were acknowledged.”

As more states like Massachusetts take a more aggressive approach to regulating for-profit colleges, he said, the ruling this week “is a reminder to states that there is a constitutional limit to how far you can go to pushing these regulations out.”

Toby Merrill, who directs the Project on Predatory Student Lending at Harvard Law School and advocated for tougher regulations, said that the ruling was “a substantial vindication” of the rules. She pointed out that although two provisions were invalidated by the court, the for-profit college group did not challenge the underlying authority of the state to create the rules in the first place.

“Many of the regulations were challenged on First Amendment grounds, and many of their challenges were rejected,” she said. “There are not commercial speech protections for some of the deceptive statements that for-profit colleges are using to take advantage of students using the federal loan programs.”


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