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March 18, 2016

Public Citizen Disappointed in Education Department’s Weak Response to Forced Arbitration

Statement of Julie Murray, Attorney for Public Citizen

Note: Over the past few months, nine U.S. senators, 46 groups and more than 21,000 citizens joined Public Citizen in calling for strong rule to protect students from forced arbitration. Last week, the U.S. Department of Education announced that it would consider, as part of an ongoing negotiated rulemaking, two alternative measures for protecting students from institutions that use forced arbitration. Negotiators have been meeting this week in Washington, D.C., to discuss the measures. Today, the department proposed adopting the weaker of its two measures for restricting the use of mandatory arbitration by schools that receive Title IV funds.

Public Citizen appreciates the department’s recognition that students and taxpayers suffer serious harm when predatory schools impose forced arbitration clauses on their students. But the solution endorsed by the department this morning is insufficient to address the problem. Its proposal also is inexplicable in light of the overwhelming support, voiced at the department’s negotiating session on Thursday, for adopting a stronger measure on arbitration to protect students and federal investments.

Under the department’s latest proposal, schools would be able to continue to force students to arbitrate individual claims and claims brought by groups of classmates. The proposal would not necessarily cover claims related to a school’s advertising, marketing, recruitment and enrollment – precisely the activities that trigger many claims against predatory schools. Furthermore, schools could continue to use mandatory arbitration clauses for non-class claims, including provisions to deter students from bringing claims by imposing high arbitration fees or limiting an arbitrator’s ability to award damages or injunctive relief.

The department should have chosen the stronger enforcement measure at its disposal, which would have conditioned Title IV funding on a school’s agreement to forgo mandatory arbitration clauses with students under any circumstances. The Federal Arbitration Act and the Higher Education Act permit the department to adopt reasonable conditions on participation in a student loan program. Requiring schools to forgo forced arbitration that harms students and taxpayers is both reasonable and the most sensible way forward.


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