One of the largest for-profit college chains in the usa has?announced that it will stop putting mandatory arbitration clauses in its enrollment agreements.
Apollo Education Group, parent company of the University of Phoenix, already doesn\’t make use of the clauses at two of its other institutions, the school for Financial Planning and the Iron Yard.
Greg Cappelli, Ceo of Apollo Education Group, commented, \”We have worked hard to further improve the student experience whatsoever of our institutions, and it is clear that eliminating mandatory arbitration is the right option for all of our students.\” Cappelli continued, \”This decision joins with a host of efforts already underway to improve student outcomes, aligns all of our U.S.-based colleges under a standard student practice, and comes with the full support in our prospective new owners.\”
The clauses, used in many contracts now from charge cards to nursing facilities, make it difficult for the consumer to sue the company in the event that they feel they have been wronged. ?The clause requires all disputes to be settled through arbitration, a closed process. However, consumer advocates argue that this typically rules in favor of the company.
In addition, such clauses are typically placed along with class-action bans, causing any claims filed to be more expensive because plaintiffs could be unable to file them like a group.
A rule was proposed earlier this year by the Consumer Financial Protection Bureau that would put a stop to the use of arbitration clauses in contracts for financial products.
At the same time, Apollo Education Group happens to be undergoing a company-wide turnaround. ?A buyout bid was approved earlier in the month by shareholders, which puts?the organization one move nearer to becoming private. ?The decision came after a?large reduction in enrollment was seen, which in turn caused the stocks to plummet over a period of several months. ?An advertisement campaign has also been launched through the University of Phoenix in order to put a stop to concerns within the quality of the school.
Meanwhile, consumer advocates are pushing for the Department of Education to ban all colleges that receive federal educational funding funding from being permitted to include mandatory arbitration clauses in enrollment agreements. ?While they\’re used regularly at for-profit schools, this isn\’t the case elsewhere. ?Advocates argue that the clauses cause students to feel they are unable to bring claims against a college, even when they feel they have been wronged. ?That could put?taxpayer funds at risk, because class-action lawsuits typically notify regulators to violations of the law that could cause schools to become unable to receive federal financial aid funding.
Department officials have also spoken up against the clauses, talking about them as “outrageous” and “gotchas” in a previous news release from earlier around. ?Two proposals were help with by the effort included in a negotiation which has taken place over several months in order to determine how and when people who believe these were wronged by their school should be offered access to loan forgiveness.