Clinton Campaign Criticizes Mandatory Arbitration

As part of a broad statement on corporate regulation, the presidential campaign of Democrat Hillary Clinton on Monday criticized the use of mandatory arbitration agreements in higher education. Some colleges, primarily in the for-profit sector, require newly enrolling students to agree to settle any disputes through arbitration rather than through a legal challenge. Consumer groups and some congressional Democrats, including Senator Elizabeth Warren, have said the companies' approach to arbitration often is unfair to students.

The Obama administration recently sought to ban mandatory arbitration agreements for all federal-aid-eligible colleges, as part of a proposed set of rules aimed at clarifying and expanding students' options for applying to have their federal loans forgiven. Clinton appears to support that move, saying mandatory arbitration clauses too often tilt the playing field to corporations.

"When the for-profit Corinthian Colleges collapsed, leaving thousands of students saddled with student loan debt, students were generally unable to sue because they had unknowingly signed away their right to take the school to court," the campaign said.

Some major for-profits, including DeVry Education Group and the Apollo Education Group, which owns the University of Phoenix, in recent months have voluntarily ended their use of the arbitration agreements.

Beauty School Chain Closes Abruptly

Regency Beauty Institute closed all 79 of its campuses this week, the for-profit chain announced on its website. The Minnesota-based Regency apologized to students for the "abrupt nature" of the news.

The beauty school chain had been struggling with sagging enrollments and losing millions of dollars in recent years, reported the Star-Tribune. And the chain's owner told the newspaper that gainful employment regulations -- new federal rules aimed at for-profit and other vocational programs -- threatened Regency's access to federal financial aid.

"In short, the organization does not have the cash to continue to run the business. There are multiple intertwined reasons: declining numbers of cosmetology students nationwide, a negative characterization of for-profit education by regulators and politicians that continues to worsen, and, in light of these factors, an inability to obtain continued financing," the company said. "This is not another case of a school being forced to shut down because it was accused of wrongdoing. We held ourselves to high educational and ethical standards."

GI Bill Benefits and ACICS Colleges

Military and veteran students who attend colleges that are accredited by the Accrediting Council of Independent Colleges and Schools (ACICS) should be able to continue receiving Post-9/11 GI Bill benefits to attend those institutions, at least for another 18 months. 

The U.S. Department of Education last week said it would back a federal panel's decision to eliminate ACICS, a national accreditor that oversees 245 colleges that collectively enroll roughly 600,000 students. The accreditor also is the gatekeeper for federal aid at 700 GI Bill-approved programs, the U.S. Department of Veterans Affairs said last week in an email to students who are enrolled in those programs. However, the U.S. Congress has passed legislation to allow GI Bill recipients to continue attending ACICS-accredited colleges. President Obama is expected to sign the legislation.

"At this point nothing changes for you for at least the next 18 months," said Curtis Coy, deputy under secretary for economic opportunity at the VA, in the email to students. "We would, however, suggest you may want to re-evaluate your educational goals and decide that your current school and program will either meet your need for the next 18 months or that you may want to consider other options, courses and/or schools."

Feds Create Website for Students at Closing Colleges

Students left befuddled and stranded by college closures will have access to a new online resource meant to connect them with financial aid and academic counselors, said Ted Mitchell, the U.S. under secretary of education, in a call with reporters Monday. The announcement for the portal,, came two weeks after ITT Tech announced it was shutting down, which forced more than 30,000 students to scramble and decide whether to attempt to transfer or to have their federal loans forgiven. The web portal is a joint effort between the department, the National Association of Student Financial Aid Administrators and Beyond 12, an organization that connects students seeking higher education with resources to help them succeed.

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DeVry University plans to adopt financial reform favored by for-profit critics

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By tackling the controversial 90-10 rule -- and lowering it for its institutions -- DeVry Education Group is looking to assert its place as a leader in the for-profit sector.

Report: For-Profits Are Costly for Black Students

A new study co-authored by researchers at Johns Hopkins University and the State University of New York at Buffalo finds that the streamlined curriculum at for-profit institutions is the reason many poor students -- particularly young African-Americans -- drop out.

The researchers studied 150 low-income black students from Baltimore and found those who attended for-profit institutions ended up in more debt and with fewer job opportunities than they might have had had they attended nonprofit two- or four-year institutions.

"The quick jump into for-profit schools really precludes other options that might be less costly and have a bigger return," said Stefanie DeLuca, an associate professor of sociology at Johns Hopkins and co-author of the report. "These young people are vulnerable to the flashy ads for these schools and lured in by how quickly they could get jobs."

Most of the young people in the study -- 53 percent -- pursued occupational certification at for-profit trade institutions. That certification is offered in fields like cosmetology, computer networking, auto mechanics and phlebotomy. The researchers found that for-profit institutions appealed to these students because of their desire to get to work quickly. These students also received little to no career counseling in high school and so they relied heavily on information heard during TV commercials.

Of the students who enrolled in a for-profit college, 31 percent earned certification by the time the study ended. Those students who chose for-profit colleges collected more debt and their loan default rates were higher than those who attended community colleges.

The study comes on the heels of the collapse of another major for-profit college, ITT Technical Institutes.

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Senate Democrats Ask Education Dept. to Discharge ITT Loans

More than 20 Senate Democrats have signed a letter to U.S. Secretary of Education John King asking the Education Department to support former ITT Technical Institute students by discharging their student loans.

In the letter, the senators asked the department to extend the 120-day window that allows students who withdraw before an institution's closure to receive a discharge. This would accommodate those students who withdrew from ITT Tech after March 1, 2014, prior to the launch of a number of federal and state lawsuits.

The senators also requested that the department stop collections on the loans of recent ITT borrowers who are in default and prevent or retract any negative credit bureau reporting for ITT students eligible for discharge. They also asked the department to apply proposed borrower-defense rule-making provisions related to automatic discharge to ITT students.

"These provisions ensure that borrowers who do not enroll at another school within three years of closure, and who otherwise qualify for a closed school discharge, see their federal debt eliminated even if they do not submit a formal application," says to the letter.

The letter follows on the heels of ITT Tech students launching a debt strike earlier this week to request that their loans be automatically discharged.

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GOP muted in response to for-profit crackdown

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As the Obama administration pushes tougher regulation, the sector is receiving little public backing from traditional allies.

ITT Tech Students Launch Debt Strike

Former ITT Technical Institute students, who learned last week that their campuses would be closing, began a debt strike Wednesday and demanded that the U.S. Department of Education cancel their student loans and close all for-profit colleges.

The strike was organized by The Debt Collective, a group that claims more than 1,000 ITT students have submitted defense-to-repayment applications asking for a closed-school loan discharge.

"We refuse to pay our government-issued student loans. We do not owe them. In fact, you owe us and our fellow ITT borrowers. By striking our debts we begin to collect on your obligation to erase them," the group stated in a letter to U.S. Secretary of Education John B. King Jr. and President Obama.

Meanwhile, ITT Educational Services, the parent company of ITT, says it will cease all operations this Friday. ITT had cut back its operations to about 200 employees from 8,000 following the announcement to close.

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Southern New Hampshire U to Teach-Out ITT-Owned Daniel Webster

Southern New Hampshire University and ITT Educational Services announced a teach-out agreement for Daniel Webster College students on Tuesday.

The online, nonprofit university worked with the U.S. Department of Education and the for-profit ITT to give Daniel Webster's 740 students, staff and faculty a way to continue their programs over the next year. Last week, ITT, which owns the New Hampshire college, announced it was closing all of its campuses.

New Hampshire is a pretty small higher education area where everyone knows everyone, said Paul LeBlanc, president of SNHU, adding that SNHU had looked into buying the college prior to ITT's purchase of it in 2009.

"Students and programs will remain intact and we'll move all employees over to us," he said.

SNHU will honor the current tuition and fees for Daniel Webster students. Following the end of this academic year, the nonprofit university will also accept all Daniel Webster students who meet the minimum admission requirements to continue their coursework through SNHU. Daniel Webster faculty will also continue to teach courses and will be hired by the university.

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