“Any controversy or claim arising out of or related to this Agreement or any breach of this Agreement, however claimed or formed, shall be settled by arbitration in accordance with the commercial rules of the American Arbitration Association, and the arbitrators` judgment rendered by the arbitrators may be recorded in any court of competent jurisdiction.” When individuals have complaints about the practices of a single company or individual, they often have the choice to conduct their disputes themselves, consolidate them into a single case, or file representatives or “class actions.” Group approaches are common in consumption cases, as individual consumers often do not have the knowledge or financial resources to make a claim. By joining forces, consumers are able to get the legal representation and evidence they need for their case. Autonomy clauses in enrolment contracts prevent students and former students from finding a solution to their grievances by joining forces with others. Since students or alumni who have to pursue their complaints individually are much less likely to do so, banning class actions allows for worse behavior on the part of schools. Out of a total of 271 institutions in the sample, 207 are for-profit, thirty are public institutions and thirty-four are long-standing non-profit organizations. (Three institutions that have recently been transformed into non-profit organizations are classified as for-profit in this report because this is where their business processes have evolved).17 The high returns of for-profit institutions are largely due to the fact that some for-profit schools are subject to government disclosure requirements, this makes it possible to collect registration contracts in bulk. Public and non-profit institutions generally do not use registration contracts at all, which makes it difficult to confirm the absence of a restrictive covenant because there is no standard document to consult. Due to the variety of methods used to compile the sample, it is unlikely that the survey is an accurate representation of the entire universe of institutions. Jacob, for example, invested his time, money and energy in a college that he believed would lead him to a career in the tech industry.
Instead, according to investigative journalist Molly Hensley-Clancy, he found himself without the skills or the job — but with significant debt. When he and other disillusioned classmates tried to band together to run the school — a for-profit company called UEI College in Long Beach, California — responsible, they discovered that among the enrollment documents they had signed, there was a provision prohibiting them from going to court. Instead, we found gag clauses in about one in ten enrollment contracts at for-profit universities that receive federal aid. No such provision was found in the case of non-profit, public or private for-profit institutions. When students go to university, they are faced with a flood of paperwork – applications, grant forms, housing, etc. – all of which seem pretty routine. Increasingly, however, some schools have added an additional form hidden in this pile of harmless documents that is different from others: a enrollment contract. In another case, Debbie Brenner and other alumni of Lamson College in Peoria, Illinois, thought they had a slam dunk case, that the school had cheated on them. They went to court, but the judge dismissed the case because the enrollment contract the students signed at the first enrollment included a “forced arbitration” clause, according to the New York Times. In arbitration, former students found themselves in front of a corporate lawyer who wanted to defend not only the school, but also for-profit education in general. In a decision that was difficult to challenge because of the way forced arbitration clauses are usually written, the arbitrator ruled against the former students and, to top it all off, gave them a legal bill of more than $350,000 for the “hardships” the students allegedly inflicted on the company that owned the school.2 Go-it-alone clauses are usually included in an arbitration clause.
As noted below, the Midwest Technical Institute includes a section in its registration agreement that states that a plaintiff cannot be part of a class action lawsuit or assert claims that are consolidated with others. The Cortiva Institute simply states that each issue is resolved through individual and binding arbitration, a clarification that, as we have seen above, can be redundant. Gag clauses prohibit students and alumni from sharing information about their complaint – or the complaint resolution process – with anyone. While confidentiality agreements are often included in dispute resolution, requiring consumers to keep their complaints secret appears to be a new strategy for companies to prevent the media or law enforcement agencies from reporting on them themselves. Like the requirement for individual rather than group processes, the strategy also inserts a firewall between injured students, reducing the likelihood that they will learn each other`s complaints and preventing them from working together to find a better solution. To conduct our research on the restrictive regulations that colleges impose on students, we had to collect copies of the contracts that students sign when they enroll in a college. Very quickly, our research took a target. If we could find a registration contract used by an institution, then we could make a decision from this document on the use of the four types of restrictive provisions. The problem was that in most traditional public and non-profit institutions, college representatives had no idea what we meant when we asked about their “enrollment contract” or “enrollment agreement.” While all of the for-profit institutions in our sample used enrollment contracts, none of the public institutions did. (Ten of the thirty-four nonprofits use enrollment contracts, but this likely overestimates their frequency, as these schools were identified through the online search for enrollment contracts.) We consulted with national associations representing public and non-profit higher education institutions, and they confirmed that most traditional higher education institutions do not actually use enrolment contracts.
In addition, we asked colleges without a registration contract about the commitments students make when they enroll. Traditional universities have many rules and procedures, which are usually described in detail in the college catalog or a student manual. Among the most common are honor codes that address issues of academic integrity and how students interact with each other. But aside from deposits that hold their place in a classroom and dormitory agreements, the only other enrollment-related agreement we could find was the form students use to request an early, binding admission decision.12 We found gag clauses in about one in ten enrollment contracts at for-profit colleges that receive federal aid. No such provision was found in the case of non-profit, public or private for-profit institutions. In the following example from Coyne College, students must commit to keeping “all aspects” of their dispute confidential. A student considering making the dispute public could be stopped by the school, noting that the student has agreed that any violation of the gag clause would cause “irreparable harm.” These enrolment contracts – formal and legalistic agreements – not typically found in traditional higher education, contain language that defines the options available to each signatory in a number of situations that most participants are likely to find purely hypothetical. Students – who intend to take a trip that they hope will change their lives in a wonderful way – can be forgiven for signing everything presented to them as quickly as they would click “Agree” with the terms of an online application. However, the wording of these enrolment contracts has a very specific purpose: to protect the financial interests of the school by restricting a student`s legal rights in the event of a problem. In order to determine which colleges use enrolment contracts and what types of restrictive covenants may be subject to students, we tried to collect information on the contracts, if any, that students sign when they enroll at different types of post-secondary institutions across the country. We used various methods to collect enrollment contracts from 271 schools across the college spectrum – public, private, nonprofit, and for-profit schools – and reviewed them for language that limited students` rights in case they complained about the value or practices of the educational experience they paid for.
(See methodological annex at the end of this report.) The trends we found when using no-intervention clauses are similar to forced arbitration. Public and non-profit colleges and privately funded for-profit colleges almost never prohibit class actions by their students and alumni, while more than one-fifth of the for-profit colleges that used federal aid in the survey required students to seek redress for grievances only in individual cases. accounting for 63% of student enrollments in the state-funded for-profit sample. . . .