American Commercial Colleges Inc. has agreed to pay the United States at least $1-million over the next five years to settle a whistle-blower lawsuit accusing it of defrauding the government, the U.S. Department of Justice announced on Friday.
The lawsuit against the Texas-based chain of for-profit colleges was filed by two of its former campus directors, in 2010. The Justice Department then said last February that it would intervene in the case. The lawsuit accused the institution of orchestrating a scheme to conceal violations of a requirement that for-profit colleges receive no more than 90 percent of their revenue from federal student-aid programs. Colleges that violate that requirement, known as the 90/10 rule, for two consecutive years can lose their eligibility to participate in those programs.
In addition to the $1-million plus interest over five years, the company could be obligated to pay $1.5-million more under the terms of the settlement, the Justice Department said in its announcement.
John C. Liu, comptroller of the City of New York, on Thursday called on two of the largest for-profit colleges to disclose data on their students’ loan-repayment rates and debt-to-income ratios, saying that he had submitted a shareholder proposal asking their parent companies to do so. As the comptroller, Mr. Liu is an investment adviser to the city’s pension funds, which include independent programs for city employees, police officers, teachers, and firefighters.
The proposal calls on DeVry Inc. and the Career Education Corporation to provide their shareholders with an annual report that includes loan-repayment rates for graduates and students who did not complete their programs, as well as students’ debt-to-income ratios and the methods used to calculate that information. “We believe annual disclosure of the requested metrics would allow shareholders to evaluate program performance in preparing students for gainful employment and assess the company’s exposure to legal and regulatory risk,” says a supporting statement provided alongside the shareholders’ resolution.
Mr. Liu, a Democrat, is running to succeed Michael R. Bloomberg as mayor of the city.
Wisconsin’s Educational Approval Board, which decides whether for-profit colleges can operate in the state, has shut down a committee that was charged with developing accountability standards for the colleges, the Wisconsin State Journal reported. The committee had faced strong opposition from influential lawmakers and education companies. One standard it proposed would have required the colleges to show that at least 60 percent of students who started programs finished them and got jobs in their fields. At its one meeting, held last month, the committee heard from industry representatives who said that standard was unreasonable. On March 12, Rep. Stephen Nass, a Republican who is chairman of the State Assembly’s higher-education committee, wrote in an e-mail to the Educational Approval Board that it should suspend the committee and work “in a more cooperative atmosphere” with the institutions.
The Academy of Art University, a for-profit art college in San Francisco, is facing fines for a string of alleged land-use violations in what the city’s planning department is calling its biggest enforcement of local regulations in decades. The San Francisco Chronicle reports that the city issued violation notices to 22 properties owned by the university, which carry a combined $26,000 in fees and the threat of fines surpassing $5,500 a day if a compliance deadline is not met. The institution was cited for problems including operating a school out of buildings designated for commercial use and turning residential hotels into student housing, according to the newspaper. Academy officials have touted the institution’s fast growth as a boon to the local economy, but critics say that growth impinges on the city’s strained housing supply and disregards planning laws. A lawyer representing the institution said the university wants to work with the city to meet its requirements.
A federal judge has thrown out a lawsuit that accused the Kaplan Higher Education Corporation of discriminating against black job applicants by rejecting them because of their credit histories, according to The New York Times. The U.S. Equal Employment Opportunity Commission filed the complaint in 2010. In a ruling issued on Monday, Judge Patricia A. Gaughan of the U.S. District Court in Cleveland dismissed the suit after concluding that the way in which an expert witness for the EEOC had identified black applicants was unscientific and unreliable.
Jack Conway, the attorney general of Kentucky, announced on Wednesday that his office had filed another consumer-protection lawsuit against a for-profit college over allegations that the institution deceived students by misrepresenting its job-placement numbers. Mr. Conway’s office filed the latest complaint, which is the fourth in his continuing investigation of for-profit colleges, against Spencerian College, a Kentucky institution with campuses in Lexington and Louisville. In a news release, Mr. Conway said the college had published job-placement rates that were far higher than those it reported to its accreditor, the Accrediting Council for Independent Colleges and Schools. Mr. Conway’s office led an investigation that resulted in a settlement last summer in which an online marketer recruiting veterans on behalf of for-profit colleges agreed to pay $2.5-million and shut down one of its Web sites.
Five for-profit campuses owned by a Rhode Island corporation have been stripped of their accreditation following their abrupt closures this past weekend. The Accrediting Council for Independent Colleges and Schools, a national accreditor that deals with proprietary institutions, announced on Friday that it had revoked the accreditation of the five schools, which are all owned by Academic Enterprises Inc.
The five campuses are the four branches of the Sawyer School, in Rhode Island and Connecticut, and the Butler Business School, which is also in Connecticut. In a written statement, the accreditor said that the closings had violated its standards that “require approved school-closure plans to protect students’ interests.”
The owners of Academic Enterprises also face debarment. Such a sanction, according to the council’s Web site, would prevent them and their family members from managing an ACICS-accredited institution in the future if they do not provide for their students’ education according to the accreditor’s standards.
The Accrediting Commission of Career Schools and Colleges has vacated an order it issued in June threatening the accreditation of 10 campuses operated by the Career Education Corporation, the company said in a recent filing with the U.S. Securities and Exchange Commission. The accreditor’s “show cause” order had required the institution to submit information about how the campuses were reporting and verifying job-placement data for graduates of their programs. The campuses’ accreditation remained in place during the review. Lifting the order means they are now free to pursue new program approvals. Another accreditor, the Accrediting Council for Independent Colleges and Schools, previously removed a similar order that affected 49 of the company’s health and art-and-design colleges.
Nine Kaplan higher-education campuses will close, and four more will be merged with other campuses, according to a Friday-afternoon Securities and Exchange Commission filing by Kaplan’s owner, the Washington Post Company. An article in the Post did not identify the campuses to be closed, but noted that Kaplan had been warned earlier that it could lose accreditation for three campuses because their students had failed to meet achievement requirements. The closings and mergers will cost the company about $18-million, according to the filing. Kaplan has about 70 campuses overall, the newspaper said, but about two-thirds of the company’s 67,605 students take their courses online.
Colorado Technical University improperly paid students in its CTU Online program some $155,000 in financial-aid money, and mistakenly retained $18,000 more after failing to identify students who had unofficially withdrawn from the program, concludes an audit conducted by the U.S. Education Department’s Office of Inspector General. The audit recommends that the university be required to repay the money. The for-profit institution, which is owned by the Career Education Corporation, disagreed with those findings and said that the review should be closed without further action.