For-Profit Settles With Massachusetts for $3.75 Million

The Salter Schools, a for-profit chain in Massachusetts, has settled with the state's attorney general, Martha Coakley, over allegations of misrepresented job-placement rates and deceptive student recruitment, according to a news release from Coakley's office. Salter agreed to pay $3.75 million, the bulk of which will be used to help roughly 600 of the schools' former students pay down loans. The company told The Boston Globe that it disputes the allegations, but did not elaborate to the newspaper.

Coakley is conducting a broad investigation of the for-profit industry. She has filed several lawsuits as part of the probe, including one against Corinthian Colleges. The Salter settlement is the second and largest of the settlements her office has secured so far.


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Clearinghouse Says Enrollment Is Down Again

College enrollment has declined by more than 1 percent for three consecutive years, according to newly released data from the National Student Clearinghouse Research Center. The drop of 1.3 percent is slower than that of the previous two years, according to the report, but still reflects a loss of almost 265,000 students. Most of the decline is among adult students, many of whom have joined the workforce as the economy rebounds.

Senators Want Loan Discharges for Corinthian Students

A group of 13 Senate Democrats want the U.S. Department of Education to discharge federal student loans for some current and former students of Corinthian Colleges. In a letter to Arne Duncan, the Senators urged immediate discharges for any borrowers who are covered by lawsuits filed by federal and state agencies against the troubled for-profit chain, which is being dismantled.

The group, which includes Sen. Elizabeth Warren, a Massachusetts Democrat, said the department has the legal authority to forgive loans when students have legal claims against their colleges. They said lawsuits in California and Massachusetts directly relate to lending to Corinthian students, as well as to the education they received.

Kent Jenkins, a spokesman for Corinthian, said it would be unjust for the federal government to act on unproven allegations that are being contested in court. "Their letter argues that court is an unnecessary formality," he said in a written statement, "and its disregard for basic fairness and due process is deeply troubling."

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New roles for guarantee agencies in era of direct federal lending

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Guarantee agencies branch out as private-lending pool dries up. Most stick to college completion and financial advising, but one produces a film while another buys 56 campuses from a for-profit.


College Used Strippers as Student Recruiters, Feds Say

The legal pursuit of a defunct for-profit college in Florida and its former owner gets wilder with each filing. A new civil suit filed by a U.S. attorney and the state's attorney general, Pam Bondi, alleges that FastTrain College defrauded the federal government with false claims for millions of dollars in financial aid.

The seven-campus for-profit, which offered credentials in IT and medical professions, closed in 2012. In October the Federal Bureau of Investigation arrested Alejandro Amor, the college's former owner, and three of its admissions representatives. They were charged with the theft of government funds. FastTrain allegedly submitted fraudulent aid claims for 1,300 students, netting $6.5 million.

According to the civil suit, however, the college received more than $35 million in Pell Grants and other federal aid. And, as The Miami Herald reported, the lawsuit said one campus "hired attractive women and sometimes exotic dancers and encouraged them to dress provocatively while they recruited young men in neighborhoods to attend FastTrain."

Amor, who owned a $2 million home, 54-foot yacht and private plane, faces multiple charges that could include jail time. 

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New President of Charleston School of Law Quits After 8 Days

Maryann Jones, incoming president of the Charleston School of Law, resigned after just eight days on the job, according to The Post and Courier, a Charleston newspaper. The law school's possible sale to a for-profit chain, the InfiLaw System, has been a source of controversy. Jones said in a written statement that she decided not to sign her job contract because of "the level of vitriol, with all sides making me a lightning rod for an unfortunate situation that was not of my making."

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Rep. Kline Will Again Lead House Education Committee

U.S. Representative John Kline of Minnesota, the Republican who leads the House education committee, will keep that post in the next Congress.

As was expected, Kline's Republican colleagues voted Wednesday to officially name him as the committee's chair for the next two years.

Kline said in a statement that "strengthening higher education" was among the "national priorities that will remain at the forefront of the committee's agenda."

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Thurgood Marshall Fund Partners With U. of Phoenix

The Thurgood Marshall College Fund and the University of Phoenix this week announced an alliance through which students at historically black colleges and universities (HBCUs) will be able to take online courses from the for-profit chain to supplement their on-campus studies. Phoenix and the scholarship fund will subsidize the online courses so participating students at HBCUs will not have to pay more than their usual, semester-based tuition and fees. "This opportunity will give HBCUs access to online learning not previously available,” said Johnny C. Taylor Jr., the fund's president and CEO, in a written statement.

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For-Profit Groups Sue to Block Gainful Employment Rules

The for-profit sector's primary trade group on Thursday filed suit in federal court to block gainful employment regulations, which the U.S. Department of Education unveiled last week. A federal judge in 2012 halted a previous attempt by the Obama administration to enact rules for vocational programs at for-profits, community colleges and other institutions. The judge said the department failed to establish its reasoning behind one of the metrics. However, the judge also ruled that the department was within its rights with the overarching thrust of the regulations.

The new lawsuit from the Association of Private Sector Colleges and Universities (APSCU) alleges that gainful employment "repeats and exacerbates" problems that led to its previous version being held up in court, calling the rules arbitrary. In a written statement, the department said it is confident that it is "within its legal authority in issuing gainful employment regulations that will protect students and taxpayers’ investments by bringing more accountability and transparency to career training programs."

Separately, a trade association representing for-profit colleges in New York filed its own federal lawsuit Thursday over the gainful employment regulations. That complaint by the Association of Proprietary Colleges echoes some of the arguments in the APSCU lawsuit: that the rule sets arbitrary standards and goes beyond the bounds of federal law. 

But the New York lawsuit also raises issues about the rule that have not yet been litigated. For example, the group argues that the Obama administration's regulation conflicts with the standards for for-profit colleges set by New York state regulators. In addition, the group claims the rule violates its due process rights because its members could be stripped of federal aid on the basis of graduate earnings data that it would not be allowed to challenge. The group says that there are serious flaws in how the Education Department plans to obtain graduate earnings data from Social Security Administration. 

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"This Week": Gainful Employment and the Future of For-Profit Colleges

On the latest "This Week," Inside Higher Ed's free weekly news podcast, Ben Miller of the New America Foundation and Vickie Schray of Bridgepoint Education join Inside Higher Ed's Doug Lederman to discuss the new gainful employment regulations. Sign up here for notification of new editions of "This Week."

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