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Higher Ed Marketing May Face Further Scrutiny in Wake of Trump Lawsuit

Higher education couldn’t come at a higher premium these days, with students accepting tens if not hundreds of thousands of dollars in debt for a degree in the hopes of landing a job in an increasingly cutthroat job market.

But a new lawsuit, filed by the New York State Attorney General’s Office against the for-profit education institution founded by real estate mogul Donald Trump, underscores the required transparency in the for-profit education industry. Specifically, institutions that tout themselves as “colleges” or “universities” have certain criteria they must meet. All higher education providers have a responsibility to make their credentials clear. Anything less, our New York education lawyers know, is a form of fraud.

When Trump University was first founded several years ago, Trump was derided by many for his foray into reality television and ill-fated presidential run. It may have been tough for the public at that point to take him seriously, even though he is a billionaire.

However, the allegation by Attorney General Eric Schneiderman is that Trump made false claims regarding the credentials of the school’s classes and instructors. Some 5,000 students bought in.

While some have taken to disparaging these students as foolish, consider President Barack Obama’s recent statements regarding the overall state of for-profit schools, some of which charge huge sums for tuition but give students little in return to prepare them for to take on a job post-graduation. In this light, Trump’s school appears not much different.

Ideally, a school could be expensive so long as it adequately prepared students for the workforce. The problem is when these high-priced institutions leave pupils with few practical skills.

Differentiating true educators from those perpetuating fraud can be a tough call. Obama has suggested implementing an independent ranking system that might help. That could be a start.

Schneiderman is demanding $40 million from Trump for his allegedly false claims. While Trump’s marketing materials claimed that these expensive courses would help students learn real estate investing secrets and techniques, it appears that’s not what they received. Schneiderman called it a “bait-and-switch.”

Students were charged $1,500 for a three-day seminar or somewhere between $10,000 to $35,000 for “mentorship programs.”

Students who “graduated” were given a “certificate of completion” and the opportunity to have their picture taken with a life-sized photo of Trump.

Founded in 2004 as a “university,” it was technically unlicensed as an educational institute. The name was changed three years ago to be called an “entrepreneur initiative,” but that came only following numerous warnings from state education officials, who said the school wasn’t chartered and as such, was operating illegally under that title.

A similar lawsuit has been filed against Trump in a federal case out of California, that one by disgruntled former students.

If this were just about Trump, the headlines might quickly fade. However, the issue appears to be much more widespread. There have been a number of lawsuits filed by both individuals and collectively as class actions and even the government against for-profit colleges. Among those:

  • The Career Education Corp. in New York recently settled a $10 million claim brought by the state, alleging students were systematically tricked into believing inflated job placement statistics and misleading advertising campaigns.
  • In July, the Chester Career College, also previously known as the Richmond School of Health and Technology, settled a $5 million class action from former students who allege the school aimed marketing at minority students and then failed to supply the solid education promised.
  • In June, a single student won a $13 million lawsuit for deceptive practices by the Vatterott College in Missouri.
  • In March of 2012, Colorado’s attorney general won a $4.5 million settlement from Westwood College for inflation of job placement rates and paying admissions officials per number of enrollments.

Schools have a responsibility to make good on their promises. When they don’t, students may be entitled to compensation.

The Law Offices of Ira S. Newman provides education litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Trump Further Sullies For-Profit Schools, Aug. 26, 2013, By Daniel Indiviglio, The New York Times
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College Affirmative Action Policy Challenges Expected in Wake of SCOTUS Ruling, June 30, 2013, New York Education Lawyer Blog