Senator Durbin Says ECMC’s Push For Mandatory Arbitration Is Straight From For-Profit College Industry Playbook

WASHINGTON, D.C. –(ENEWSPF)—December 19, 2014. U.S. Senator Dick Durbin (D-IL) today said that the Department of Education should not allow ECMC Group to include mandatory arbitration agreements in student enrollment documents.  In his letter to ECMC, Durbin called the tactic “alarmingly similar” to those used by the for-profit college industry to shield themselves from being held responsible for wrongdoing while preventing students from receiving relief.  His letter was also sent to Education Secretary Arne Duncan and the Illinois Board of Higher Education

“While a common tactic in the for-profit playbook, use of mandatory arbitration is almost unheard of at public and private, not-for-profit institutions.  In addition some states, like my home state of Illinois, prohibit these types of agreements as a condition of receiving approval for some schools to operate in that state,” said Durbin.  “If ECMC wants to truly be a not-for-profit institution of higher education, it should follow the clear model of non-profit education.”

Text of today’s letter is below:

December 19, 2014

Mr. David Hawn
President and CEO
ECMC Group
1 Imation Place
Building 2
Oakdale, MN 55128

Dear Mr. Hawn:

I write today about ECMC Group’s potential acquisition of 56 Corinthian Colleges, Inc., campuses, including those in my home state of Illinois.  Specifically, I am deeply concerned about ECMC’s reported insistence on including mandatory arbitration agreements in student enrollment documents and ask you to drop that effort immediately.

Since the collapse of Corinthian, I have been adamant with the Department of Education that the victims of that company not be thrown to the wolves again by allowing another for-profit company to acquire the campuses.  While I have several other concerns about ECMC Group, I am pleased that it is a not-for-profit company, in name at least.  I am concerned that as negotiations continue, ECMC is signaling that it intends to operate its new education subsidiary in a manner alarmingly similar to a for-profit institution, including through the use of that industry’s hallmark – mandatory arbitration agreements.

These clauses, often buried in stacks of enrollment documents, limit the ability of students to hold a school accountable in a court of law when the school’s misconduct has caused the students harm.  The clauses have largely shielded companies like Corinthian from being held responsible for wrongdoing and prevented students whose lives have been ruined by these schools from receiving relief. 

While a common tactic in the for-profit playbook, use of mandatory arbitration is almost unheard of at public and private, not-for-profit institutions.  Robyn Smith of the National Consumer Law Center and noted expert in the field says, “in my over 15 years of working on student loan issues, I have never seen an enrollment agreement from a non-profit higher education institution with an arbitration clause or class action ban.”  According to a recent letter to Secretary Arne Duncan, Attorney General Eric Holder, and Director Richard Cordray signed by nearly 50 education, labor, consumer, veteran, and law organizations, “Nonprofit colleges do not require mandatory arbitration or ban class action lawsuits as a condition of enrollment.” Other organizations such as theAssociation of Public and Land-Grant Universities,Association of Community College Trustees, American Association of Collegiate Registrars and Admissions Officers, the Federation of Independent Illinois Colleges and Universities, National Association of Independent Colleges and Universities, have also expressed how rarely, if ever, mandatory arbitration is used in enrollment by not-for-profit institutions.

In addition some states, like my home state of Illinois, prohibit these types of agreements as a condition of receiving approval for some schools to operate in that state.  According to 23 Illinois Administrative Code 1095.40:

“No school may enter into an enrollment agreement in which the student waives the right to assert against the school or any assignee any claim or defense he or she may have against the school arising under the agreement. Any provisions in an enrollment agreement in which the student agrees to such a waiver shall be rendered void.”

I will encourage the Illinois Board of Higher Education to aggressively enforce this and any other applicable law to protect students when considering any application ECMC may make to operate in Illinois.

If ECMC wants to truly be a not-for-profit institution of higher education, it should follow the clear model of non-profit education.  But regardless of ECMC’s profit status, you have said publicly that with this acquisition you want to “help students.”  You can start by not denying students’ rights to bring claims of wrongdoing before the courts.  As such, I urge you to immediately drop any insistence on mandatory arbitration agreements in further negotiations over the Corinthian acquisition.  This voluntary action would help regain the trust of students scarred by their Corinthian experience and help assure skeptical policymakers, like me, of your commitment to students.

I look forward to your prompt reply.

Sincerely,

Richard J. Durbin

United States Senator

cc: Secretary Arne Duncan

      Illinois Board of Higher Education

Source: durbin.senate.gov