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CollegeAmerica Wins Major Legal Victory

CollegeAmerica Wins Major Legal Victory

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Written from information provided by CollegeAmerica

The private career college sector has been under massive attack for almost six years across the country. The investigations and lawsuits filed are often copycats – making similar claims that private career colleges are “bad actors” who “lure students” to enroll by “false and deceptive advertising” and/or “force students” to enroll by “predatory admissions.” The attorney general’s office in Colorado made such claims against CollegeAmerica. Carl Barney, Chairman of CollegeAmerica, said of these attacks, “Through these ongoing assaults, the power of the States is being used to crush us – to parade us through the newspapers and the courts, to invent things about us and pass them off as true. Well, CollegeAmerica is fighting back against these odious and absurd slanders being propagated amongst the public, the press and the courts.”

The Colorado attorney general’s office filed a massive complaint on Dec. 1, 2014 against CollegeAmerica, followed almost immediately on Dec. 30 with a preliminary injunction motion seeking 21 injunctions against CollegeAmerica. A five-day hearing on the attorney general’s preliminary injunction motion was held April 20-25, 2015, in the 2nd Judicial District Court before Judge R. Michael Mullins. Judge Mullins denied all 21 requests for injunction on July 16, 2015. “This victory vindicates CollegeAmerica and its students, graduates, alumni, and faculty and staff,” said CollegeAmerica’s CEO, Eric Juhlin. He continued, “CollegeAmerica is extremely pleased with Judge Mullins’ carefully reasoned decision denying all 21 of the Colorado AG’s request for injunctions.

The judge’s decision to not impose any injunctions confirms CollegeAmerica’s position that the AG’s allegations are meritless and biased.”

The decision verified that CollegeAmerica’s recruitment and other business practices are of high integrity. In commenting on CollegeAmerica’s admission process, Judge Mullins wrote:

“The process provides institutional safeguards to ensure that prospective students get the accurate information they need to make an informed decision about whether to enroll.”

Throughout the 2 .-year investigation and litigation, the Colorado attorney general’s office repeatedly showed its bias against private career-focused colleges, Juhlin said, and it did so to the detriment of CollegeAmerica’s students, graduates, faculty and staff, and other private colleges.

“This investigation and preliminary injunction hearing wasted hundreds of thousands of taxpayers dollars,” they said. “Those dollars will continue to be wasted as long as the Colorado AG pursues this meritless assault.”

Barney agreed, “The judge’s opinion, plus comments made during closing arguments, confirms in clear terms that CollegeAmerica treats students fairly. In fact, he said evidence presented by Assistant Attorney General Libby (DeBlasio) Webster was so weak that the judge said Webster appeared to have been motivated by a bias against private colleges. For a judge to make this kind of rebuke is extraordinary.”

The attorney general’s massive investigation included more than 10 civil investigative demand interviews; two subpoenas duces tecum comprising 90 separate document requests and productions of more than 100,000 pages; and significant investigator contact and interviewing of many former students, graduates and employees. In addition, an undercover investigator posing as a prospective student made calls and visited the college.

At the outset of the investigation, Juhlin met with (now-former) Colorado Attorney General John Suthers, Webster and other AG personnel, and told them that CollegeAmerica would cooperate with the investigation. However, Juhlin made this request: If the AG’s office found any areas of concern, would they inform him so the school could immediately take steps to rectify any concerns. He repeated that request during the next 2 . years, but DeBlasio-Webster refused all requests.

“The judge’s denial of the motion in its entirety is based on his findings that the AG was unable to demonstrate a probability of success on the merits,” Barney said. “This is particularly noteworthy in light of the judge’s repeated statements that he understood that the ‘reasonable probability of success’ standard for issuing a preliminary injunction required less than a preponderance of the evidence, which we believe was an erroneous low standard. The AG was unable to meet even this low standard.”

Barney said DeBlasio-Webster presented a massive case covering almost every aspect of their colleges. “Yet despite the AG’s 2 . – year head start and the short time we had to prepare our case, the judge held that the AG had not established a probability of success on any of the 21 injunctions it sought,” he said.

“Perhaps even more importantly, the judge observed that CollegeAmerica is a responsible corporate citizen that is providing an important and valuable service to Colorado consumers.”

The judge’s decision is a huge win for not only CollegeAmerica, but for all private colleges who are also being attacked and vilified.

“This is a significant victory, not just because we got a 100 percent win on defeating the preliminary motion for 21 injunctions, but because of the massive scope of the AG’s attack,” Barney said.

“Their assault was massive, furious, and rapid. And we knocked it out of the park!”

Barney said he feels sympathy for and understands why schools would settle such a case. “The amount of work, the cost, the disruption, the working nights and weekends to put the case together is staggering. But I oppose settling because it hurts us and everyone else,” he said. “When one school settles it hurts the whole sector; when one school wins, it helps the whole sector.” As Ayn Rand wrote, ”When one fights for one’s own rights, one fights for the rights of all.”

DeBlasio-Webster claimed that CollegeAmerica’s admissions process was “predatory,” that its advertising was “false and misleading,” and that its institutional loan program called EduPlan was “unconscionable.”

However, Judge Mullins disagreed with all points in his decision.

In commenting on CollegeAmerica’s admissions process and advertising practices, the judge wrote:

“Enrollment in CollegeAmerica is a multi-step process that takes place over several weeks. It is designed to provide students with accurate information about the considerations most students find material in deciding whether to attend CollegeAmerica. The process is also designed to provide information and disclosures deemed necessary and appropriate by state, federal and accrediting oversight agencies. The series of mutually reinforcing steps provides progressively more information to prospective students as they advance through the enrollment process. No student incurs any financial obligation until after completing the enrollment process and attending the first three weeks of classes, which do not start until at least one week after the student signs the Enrollment Agreement, and several weeks after the student first saw any CollegeAmerica advertisement. The process provides institutional safeguards to ensure that prospective students get the accurate information they need to make an informed decision about whether to enroll.”

However, Judge Mullins did note that while some of CollegeAmerica’s advertisements contained true statements about national wages, the wages were not representative of the average starting salaries that CollegeAmerica graduates could expect to earn. Since CollegeAmerica voluntarily removed the single sentence in a direct mail advertisement that cited average starting salaries from the National Association of Colleges and Employers, Mullins wrote that a preliminary injunction was not necessary.

Mullins also said there was no evidence of CollegeAmerica providing false or misleading information about its institutional loan program. He wrote,

“CollegeAmerica’s statements that EduPlan helps make college ‘affordable’ are not misleading.”

Northwestern University economics professor Jonathan Guryan validated the benefits afforded CollegeAmerica graduates. Guryan’s analysis showed that, on average, CollegeAmerica’s bachelor’s degree graduates increased their wages upon graduation by 46 percent and increased lifetime earnings by more than $563,000, while its associate degree graduates, on average, increased their wages upon graduation by 34 percent and increased lifetime earnings by more than $220,000.

Barney said the attorney general’s 2.-year investigation and preliminary injunction hearing wasted hundreds of thousands of dollars for Colorado taxpayers and more for CollegeAmerica. “This is an important win for CollegeAmerica and all private colleges,” Barney said.

“This is the first time there has been such an evidentiary hearing on AG allegations against the private college sector and that a court has ruled on those multiple allegations on the merits.

Juhlin, writing in The Denver Post, stressed that their colleges operate with the highest integrity and provide students with the information they need to make informed decisions. What Ms. DeBlasio-Webster fails to realize is that students deserve – in fact, need – choices. “‘One size fits all’ does not work in higher education,” Juhlin said, adding that private career colleges are an important and valuable option for Coloradans.”

What does CollegeAmerica offer that public colleges might not offer? “Simply put: obsessive student support,” Juhlin said. “We help students with financial aid, we call students who miss class, we give students free tutoring, we help students with transportation problems, and we offer flexible schedules for students who have to work during college.”

He acknowledged that no college is perfect. “We have had students who were not successful,” Juhlin said. “At times, we have failed to meet a student’s expectations. Those instances are difficult and disappointing, but they are a reality for any college. The key is that CollegeAmerica never stops focusing on its students’ needs and works tirelessly to help each and every student graduate and get a much better job sooner.”

“Education in Colorado should take many forms. All colleges should produce results and be held to equal standards” Juhlin said. “It takes more than one type of educator to irrigate the deserts. It is time for the Colorado attorney general’s office to realize that.

State Claims, College Responses and Court Findings

State Claim 1: CollegeAmerica advertisements stating that graduates could make more money and get better jobs were false and misleading, and CollegeAmerica’s admissions process, taken as a whole, led students to enroll in CollegeAmerica based on a false impression that they would obtain better jobs after graduation.

CollegeAmerica Response: Despite its extensive investigation, the attorney general was unable to find a single witness to testify that he or she had ever been deceived or misled by any advertisement. In addition, Jonathan Guryan, a noted Northwestern University economics professor, analyzed actual outcomes of graduates of CollegeAmerica’s Colorado campuses between 2004 and mid-2014. Guryan found that, on average, CollegeAmerica graduates with a bachelor’s degree would earn $563,000 more over their lifetimes than had they not attended college, and graduates with an associate degree would earn $220,000 more.

Court’s Findings: Requested injunction denied. Judge R. Michael Mullins, 2nd judicial district court, wrote: “Enrollment in CollegeAmerica is a multi-step process that takes place over several weeks. It is designed to provide students with accurate information about the considerations most students find material in deciding whether to attend CollegeAmerica. The series of mutually reinforcing steps provides progressively more information to prospective students as they advance through the enrollment process. The process provides institutional safeguards to ensure that prospective students get the accurate information they need to make an informed decision about whether to enroll.”

State Claim 2: CollegeAmerica falsely represented that its academic credits would transfer to other schools.

CollegeAmerica Response: Prospective students are provided repeated, conspicuous disclosures informing them that their credits may not transfer. For example, the first page of the enrollment agreement, in bold, italic type, states: Assume your credits are not transferable to any other institution. We do not and cannot make any representation whatsoever regarding transfer or acceptance of our credits to any other institution.

Court’s Findings: Requested injunction denied. At the closing argument, when Colorado Assistant Attorney Libby (DeBlasio) Webster asked, “How is a student supposed to know (whether his/her credits will transfer)?” the judge responded, “They can read! I don’t know of any more disclosure you can make.”

State Claim 3: Advertisements indicating that the college’s institutional loan program, EduPlan, helped make college more “affordable” were false and misleading.

CollegeAmerica Response: Several witnesses – including the AG’s own witnesses – testified that the funds they received from EduPlan institutional loans helped them to afford college; they could not have attended CollegeAmerica without them.

Court’s Findings: Requested injunction denied. The judge wrote: “The terms of EduPlan loans are clearly disclosed. The loan amount, interest rate, and total payments are clearly provided. There is no evidence of the college providing any false or misleading information about EduPlan loans. Further, CollegeAmerica’s statements that EduPlan helps make college ‘affordable’ are not misleading.”

State Claim 4: EduPlan loans were unconscionable because of the allegedly high default rate on those loans.

CollegeAmerica Response: Webster’s claim is based on her misstatement of the default rate. For graduates, the default rate on federal loans is not between 25.5-33.3 percent as the AG claims. For the last two years, the default rate for graduates has been below 9 percent. Moreover, even if the AG’s incorrect numbers were used, many community colleges in Colorado have much higher default rates.

Court’s Findings: Requested injunction denied. “The state has not produced sufficient evidence that there is a reasonable probability that CollegeAmerica’s EduPlan loans violate the UCCC,” Judge Mullins wrote.

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