How the Explosion of the For-Profit Career Colleges Are Swindling Students and Draining the Country's Coffers
Continued from previous page
Like loan officers in the sub-prime mortgage industry, the Admissions Representatives are required to meet minimum enrollment quotas to maintain employment and gain promotions. Similar to aggressive military recruiters, they are encouraged to sign-up as many students as possible by participating in competitive "games" based on applications, actual enrollments and boiler room sales tactics. "Winners" are rewarded with paid vacation days, gift cards to local restaurants, parties and exotic vacations. The allegations in the suit claim the company:
fostered a competitive sales environment by regularly sending emails updating the Admissions Representatives on new sales. By way of illustration, an Admissions Representative sent an email from "The Drivers" team stating "Everyone Hit the DECK!!!!!!!!!!!!! A Drive BY JUST Occurred!" with a violent depiction of a drive-by shooting to let other teams know that one sales representative had secured his second application of the day.'A copy of "The Drivers" email is attached as Exhibit F in the suit.
Diploma Mills and Debt Peonage: How it all works
The way the whole scheme allegedly works is that once the Admissions Representative successfully convinces a student to enroll in the college, the focus of the deceptions and misrepresentations then shift to financing the astronomical cost of the 'education'. The cost of the programs can be over exorbitantly high. climbing in some cases to $80,000.00.
As soon as the students are handed over to the loan officers by the 'ad reps', they are told that Westwood touts a four-tier loan system for funding the education of enrolled students: (1) federal grants, (2) federal loans, (3) private loans, and (4) a "Westwood" or "Apex" loan. Each student is contractually obligated to apply for and accept all traditional loan options. Once this is done, Westwood guides them through "alternative lending." If a balance remains on a student's account after federal and private loans are applied, the internal "Apex loan program" kicks in. The Apex loan is unilaterally created by the school and carries an 18 per cent interest rate. Here is the way the scam allegedly works.
We've all seen advertisements for vocational schools in which smiling young working class men and women boast about getting their lives back on track by going back to college to get the coveted degree. Capitalizing on economic frustration the 'career schools' hold out economic success as candy to consumers.
Take the case of Michael Mensch, a member of the 'class' suing Alta Colleges, Inc. As a student, Mensch entered into an Online Program Enrollment Agreement with Westwood College Online that included limited financial terms and disclosures relating to his enrollment. Mensch never received or signed a Retail Installment Contract or any other form of promissory note authorizing the issuance of a Westwood loan, nor was he ever informed that such a loan would be created in his name.
During the enrollment process, Mensch relied on the guidance of the college's Admissions Representatives to direct him through the enrollment process. He was under the impression they were experts who were qualified to provide him with the assistance needed to make enrollment decisions. Mensch detrimentally relied on the Admissions Representative's representations of cost, fees, job placement opportunities and statistics, and accreditation in making his decision to attend the college. Specifically, Mensch was also told that he could expect a job making over $100,000.00 in video game design.
Mensch attended school from October 2007 through April 2008, completing two terms and beginning a third. He received high marks in the classes he completed and was commended for being one of the outstanding students. During the course of the third term, Mensch's family began to receive billing statements from a Sallie Mae loan. Mensch became concerned by the amount of the loans and the fact that the payments were coming due, so he decided to stop attending classes. He withdrew on April 24, 2008. The total cost for Mensch's brief attendance was $15,182.45.