June 26, 2013
Jury Awards Former Student $13 Million In Lawsuit Against For-Profit College
One of the more common complaints against for-profit colleges is that the institutions make promises to prospective students about job placement and salary that the schools don’t make good on. A woman in Missouri recently sued one such for-profit school, saying it misled her about its medical assistant program. She had been seeking somewhere between $2-4 million in damages, but the jury went ahead and awarded her $13 million.
The plaintiff had originally enrolled at Vatterott College, which has 19 campuses in 9 states, with the understanding that she was in the school’s medical assistant program. She said the school told her it was a fast-track to an eventual nursing degree and that the medical assistant certification alone would land her a job earning $15-17/hour.
And so she took out around $27,000 in loans and put in 60 weeks worth of study, only to find out that she was actually in a medical office assistant’s program, and that the medical assistant certification would require another 30 weeks and around $10,000.
Then she found out, during her six-month search for an medical office assistant position, that the certification isn’t even a prerequisite for the job. Unable to find a gig tied to the coursework for which she’d paid dearly, she ended up accepting a part-time job in a cafeteria lunchroom before landing a full-time job at a corporate bakery.
She found a lawyer and sued Vatterott, alleging that it had violated the Missouri Merchandising Practices Act. The case was seeking reimbursement for the $27,000 in student loans she’d taken out plus damages.
She was surprised that the jury came back with a whopping $13 million judgement, especially since even her lawyer says that the most allowed by Missouri law is the higher of either $500,000 or or five times actual damages plus other expenses, including legal fees.
And so it almost goes without saying that Vatterott will appeal the case.
“We are confident at Vatterott that our systems and admission processes are handled professionally,” the school tells the Kansas City Star. “Our mission is to transform and better the lives of our students through quality, career education. We are proud of this mission and will continue to pursue it with professionalism and integrity.”
The jury’s decision to award $13 million is likely a result of the recent backlash against for-profit colleges. Recent studies have shown that students at these schools are responsible for a disproportionate amount of federal student aid money disbursed over the last decade, and that people who take out loans for for-profit colleges are more likely to be delinquent on their payments after they leave school.
These schools have also been criticized by regulators, legislators, and consumer advocates for placing more of an emphasis on marketing and enrollment than they do on education. A 2012 Senate report found that only 17% of what for-profit colleges spend actually goes to instruction, while 42% of the money goes to marketing, recruiting and profits for the companies. By comparison, not-for-profit schools, both public and private, pay less than 1% on average for marketing. Senator Tom Harkin has introduced legislation that would take away federal student aid for colleges that spend too much on marketing and advertising.
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