[Congressional Record Volume 162, Number 84 (Thursday, May 26, 2016)]
[Senate]
[Page S3278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    MANDATORY ARBITRATION CLAUSES IN FOR-PROFIT COLLEGE ENROLLMENT 
                               AGREEMENTS

  Mr. DURBIN. Mr. President, I have not been shy about coming to the 
Senate floor to voice my concerns about the for-profit college 
industry. This is an industry that enrolls 10 percent of college 
students, collects 20 percent of Federal student aid, and accounts for 
over 40 percent of student loan defaults. This industry has a terrible 
track record; yet it continues to collect billions each year in Federal 
funding. If there ever was an industry that needed to face 
accountability, it is the for-profit college industry. But for-profit 
colleges have long avoided accountability to their students and to 
regulators through the use of mandatory arbitration clauses.
  For years, mandatory arbitration clauses have been buried in the fine 
print of student enrollment agreements at for-profit schools. Students 
usually didn't even know that, by signing these agreements, they were 
giving up their right to a day in court if the school's misbehavior 
caused the students harm. Mandatory arbitration clauses mean, for 
example, that, if a student is misled or deceived by a school's 
advertising and goes into debt as a result, the student can't take the 
school to court. Instead, the student is forced into a secret 
arbitration proceeding where the playing field is tilted against the 
student's interests.
  Mandatory arbitration clauses allow schools to avoid accountability 
to their students--and the secrecy of arbitration proceedings means 
that misconduct stays hidden from the attention of regulators. 
Mandatory arbitration clauses are not used by legitimate nonprofit 
colleges, either public or private. But these clauses were widely used 
among for-profit colleges--including Corinthian, the now bankrupt for-
profit college which for years lied to its students and to regulators 
about its job placement rates and other data.
  There is a growing recognition that mandatory arbitration has helped 
hide misconduct in the for-profit college industry. Also, because these 
clauses prevent students from seeking meaningful relief in court from 
the schools that wronged them, students have had to seek relief from 
the Federal Government for their student loan debt. This means that 
taxpayers are on the hook for helping these victimized students, 
instead of the for-profit colleges that harmed them.
  I have joined my colleagues in urging the Department of Education to 
issue strong regulations to prevent for-profit colleges that receive 
Federal funds from using mandatory arbitration clauses, and I have 
called out for-profit colleges that use these clauses.
  On April 13, I came to the Senate floor and mentioned three names of 
schools that use these clauses: DeVry, the University of Phoenix, and 
ITT Tech. Lo and behold, two of these three for-profit schools--DeVry 
and the Apollo Education Group, which owns the University of Phoenix--
have now made commitments to stop requiring their students to submit to 
mandatory arbitration. Apollo made their announcement last week, and 
DeVry officials told my staff that they discontinued the use of these 
clauses a few weeks ago, on May 13.
  This is good news. These actions reflect the growing consensus 
outside and inside the for-profit industry that mandatory arbitration 
has no place in higher education enrollment. Also, the decisions by 
Apollo and DeVry reaffirm that the Department of Education is on the 
right track in reining in mandatory arbitration. The Department should 
finish the job by issuing rules that end this practice among all 
schools that receive Federal dollars.
  Now, one note of caution--the devil is in the details when it comes 
to arbitration clauses. I have heard promises before from education 
companies to end mandatory arbitration, only to see those companies add 
new fine print that finds other ways to block students' access to 
court. I will be carefully checking the fine print of the new 
enrollment agreements to make sure these schools are not imposing new, 
more subtle restrictions on their students' access to court. If the 
fine print does reflect their commitment, I believe Apollo and DeVry 
deserve credit, but they still have a long way to go to improve student 
outcomes and prove they are going to dump the old for-profit college 
playbook.
  ITT Tech, the spotlight is now on you. ITT Tech's executives have 
demanded their own day in court to respond to investigations and 
allegations of misconduct that were brought by regulatory agencies. At 
the same time, ITT Tech has continued to force its own students into 
mandatory arbitration. ITT Tech and all for-profit colleges should put 
an end to this practice of mandatory arbitration. They should join the 
growing consensus against these clauses that is reflected in the views 
of the Department of Education, student groups, veterans groups, civil 
rights groups, consumer groups, and now even some of the largest for-
profit colleges.
  It is time to stand up for accountability and for putting students 
first. It is time to end mandatory arbitration clauses in the for-
profit college industry once and for all.

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