"The Good Wife" and the Bad College

Unlike many of the industries that force their customers and workers into arbitration, the for-profit college industry is fueled almost entirely by taxpayer money -- some $30 billion per year, for many companies amounting to around 90 percent of their revenue.
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As approximately 900 people have kindly informed me in the past 36 hours, the CBS drama "The Good Wife" on Sunday highlighted the struggles of students seeking legal redress for abuses they suffered at the hands of high-priced, low quality for-profit colleges. I appreciated the tip, and I'm impressed to see how well "The Good Wife" brought to life these issues.

In the episode, a young veteran felt ripped off by her former school, the fictitious for-profit Colosseum University, but her lawyers soon discovered that they could not take the student's grievances to court, because, like all Colosseum students, she had signed an enrollment agreement with a fine-print requirement that any student's claim had to be resolved not by a jury but through private arbitration.

Such agreements stack the legal deck against students, whether they claim to have been deceived by a recruiting pitch, or to have been assaulted by a campus employee, or any other dispute with the school.

Remarkably, the very same day the "Good Wife" episode premiered, the New York Times launched a multi-part investigative series highlighting how a group of corporate lawyers, aided by five U.S. Supreme Justices, engineered a radical transformation of the law that has pushed consumers and employees with beefs against a wide range of industries -- banks, cable companies, fast food restaurants, as well as for-profit colleges -- into arbitration. Arbitration can be extremely expensive for claimants, and the private arbitrators tend to side with the corporations that they hope will hire them the next time.

Just as important as the prohibition on going to court, the corporate lawyers have worked into these fine-print agreements a ban on customers or workers combining their claims into a class action case. Without the ability to join together in a single suit, and thus often with relatively small dollar amounts in potential legal fees, people harmed by corporations frequently have trouble finding a lawyer to take their cases. With these limitations on legal rights in place, it's much easier for predatory companies to systematically abuse customers and get away with it.

And many for-profit colleges, large and small, are predatory companies -- a lot of them are now under investigation for fraud and other abuses by federal and state law enforcement.

The "Good Wife" episode mentioned that students of a real-life predatory for-profit, the collapsed Corinthian Colleges, had joined together in a debt strike, refusing to pay down their loans. The Corinthian debt strike has been a game-changer in raising awareness and moving policymakers to protect students, and in the show the lawyers use the threat of a similar Colosseum debt strike to get the company to provide relief to their client.

But the reference to Corinthian was particularly appropriate because of the outrage perpetrated earlier this year by the non-profit debt-collection company ECMC, which, with the approval of the U.S. Department of Education, purchased many of Corinthian's Everest College campuses.

ECMC initially demanded that it be allowed, like Corinthian and most other for-profit colleges, to bar students from suing or from combining their claims in a class action, even in arbitration.

Industry critics, including Senator Dick Durbin (D-IL), and our coalition of organizations argued that these provisions harmed students and were not used by non-profit colleges; the only examples that ECMC could point to were a handful of non-profits that had recently converted from being for-profits.

Under pressure, ECMC finally announced it would allow students to take claims to court, and the company CEO, Dave Hawn, as well as the Department of Education, made a big deal of that supposed concession. But then, without informing the Department, ECMC released its fine print agreement, and it pushed the students toward arbitration anyway, barred students who did get to court from arguing their claims before a jury -- a judge would decide -- and banned not only class actions, but even "mass actions," the right of just two or more students to combine their claims in a single case. Thus ECMC tried to shield itself from responsibility, even where it might harm students.

The Department of Education should not allow that with any college. Unlike many of the industries that force their customers and workers into arbitration, the for-profit college industry is fueled almost entirely by taxpayer money -- some $30 billion per year, for many companies amounting to around 90 percent of their revenue. So the taxpayer here should have some protection -- and some leverage. The Department of Education should not have permitted ECMC, its hand-picked purchaser of Corinthian campuses, to perpetuate the kind of fine-print abuse that Corinthian did.

I believe the Department of Education has the legal authority to condition a school's eligibility for federal student grants and loans on the school allowing students who claim injury to pursue their claims in court and to combine grievances with those of similarly harmed students. Asserting such authority would be an important step in protecting students from fraud and other abuses.

You can watch the full "The Good Wife" episode, "Payback," here. (A YouTubed clip from the episode, at least for me, was preceded by an ad for the University of Phoenix. #FML)

This article also appears on Republic Report.