In a floor speech today, Senator Dick Durbin (D-IL) said he was "troubled" that ECMC, the debt collection company that has acquired more than 50 campuses of collapsing for-profit college chain Corinthian, is "already, just weeks into owning and operating these schools, failing to live up to the promises they made to the students and to me."
Durbin said that ECMC's CEO, Dave Hawn, had indicated that he had listened to the concerns of Durbin and others and agreed to drop a policy forcing students to give up their right to bring grievances with the school to court. But Hawn did not tell Durbin that ECMC would in fact compel students to accept fundamental limits on their ability to bring a lawsuit.
Durbin recounted that he had written to Hawn in December asking him not to require students to bring their disputes with the school to a private arbitration -- as Corinthian, one of the most abusive for-profit colleges, had long required. As Durbin noted, ECMC said it planned to run its new college subsidiary, called Zenith, as a non-profit, and non-profit colleges don't force students into mandatory arbitration.
Arbitration tends to favor the institution over the individual, and would hinder a range of student claims against a school, from deceptive recruiting to campus assault.
"I told Mr. Hawn that if he was truly going to run a not-for-profit institution, he should allow the clear model [of'] non-profit education -- no mandatory arbitration clauses for students," Durbin said. "In response to me, Mr. Hawn certainly said the right things." Hawn told Durbin that he would accept that "students have an unquestioned right" to pursue claims in court.
"I felt pretty good about that response," Durbin said today. "Well, then we read the fine print."
Durbin discovered -- as Republic Report exclusively reported last month -- that ECMC's new student enrollment agreement forced students going to court to give up their right to a trial by jury and instead have the case decided by a judge. A student is also forced to give up her right to file a class action lawsuit or even to combine her claims with a single additional student -- tools that make it easier for students to obtain a lawyer.
"That isn't what Mr. Hawn told me was going to happen," Durbin said.
Durbin also argued today that the new Zenith enrollment agreement, while not requiring arbitration, "does everything it can to steer students into arbitration."
I previously wrote about a Zenith enrollment agreement I obtained that contained the same kind of terms described by Senator Durbin. Hawn last month confirmed to me that key provisions in the text -- including the restrictions on lawsuits -- were indeed part of the agreement Zenith was requiring for its new students.
Durbin also focused on the fact that Corinthian Colleges executives seem so far to be avoiding liability and even scrutiny for presiding over the collapse of an institution that has been taking in as much as $1.4 billion annually but has left many of its students unemployed and with overwhelming debt: "Corinthian executives seem to be off the hook.... They took their million dollar salaries and then faded into obscurity." Meanwhile, "The former students are left with worthless educations and more debt than they can ever repay."
Durbin cited Dawn Thompson, an Illinois student who has over $100,000 in debt after taking a Corinthian program to become a paralegal -- and is now working a minimum wage job as bank teller.
This article also appears on Republic Report.