Date: June 10, 2016Author: Denbeaux & Denbeaux
A department spokesperson said a rule on the use of forced arbitration will be out in the coming days.
Public Citizen, a regulatory advocacy group, said it petitioned the department back in February to ban nonprofits and other trade schools that receive federal funds from including arbitration clauses in student contracts.
The clauses – typically buried in the fine print – often state that disputes with the school can only be resolved by a privately appointed individual or arbitrator, rather than through the court system. They also bar students from joining in on class action lawsuits against the school.
“Few students are aware that arbitration clauses are in their contracts or that these clauses preclude them from going to court or joining with other students in suits to address misconduct by their schools,” Public Citizen said in a release last week. “Even when they do know, many students feel compelled to sign, because refusing means foregoing the educational benefits they hope to receive.”
In March, the department said it was considering including a rule on forced arbitration alongside its efforts to protect student borrowers from predatory higher education institutions.
“The Department is working to ensure that no college can dodge accountability by burying ‘gotchas’ in fine print that blocks students from seeking the redress they’re due. Legal aid, veteran, consumer, and student advocacy groups have all shared with us how mandatory arbitration has harmed students across the country. We heard them and agree,” Under Secretary of Education Ted Mitchel said in a statement at the time. “Which is why we’ve incorporated ideas from non-federal negotiators to limit mandatory arbitration agreements.”
The issue has the attention of Democratic lawmakers.
In April, a group of 30 Senate Democrats, including Sens. Patty Murray (D-Wash.) and Al Franken (D-Minn.) called on the department to ban mandatory arbitration requirements as a condition for receiving federal taxpayer dollars.
“By enabling students to pursue colleges directly when they have been subjected to deceptive or abusive practices, the department would be better safeguarding the taxpayers’ investment in higher education,” the letter said.