For Immediate Release - April 03, 2013

Brockton For-Profit School Sued for Misleading Students with Deceptive Ads, Misrepresenting Job Placement Rates

AG Cites Concerns About For-Profit Business Model and Will Call For Further Safeguards to Protect Students and Taxpayers

PLYMOUTH – A Brockton-based for-profit school has been sued over allegations that it misrepresented job placement numbers and made other misleading statements about its training to students, leaving graduates with large amounts of debt and few opportunities, Attorney General Martha Coakley announced today.

Listen to press conference audio, view video, transcript and lawsuit:

The complaint, filed in Plymouth County Superior Court on Wednesday, alleges that Sullivan & Cogliano Training Centers, Inc., (S&C) made false and misleading statements in advertising, enrollment materials, and on its website regarding the rate at which its students were able to obtain employment in their field of study.

“We allege Sullivan & Cogliano deceived students by promising careers in the medical field with misleading ads and inflated placement rates,” AG Coakley said.  “We are conducting an extensive investigation into the for-profit school industry. For-profit schools are extremely expensive and heavily funded through federal student loans, so all taxpayers have a stake in this. If students do not receive these promised jobs and wind up in default, the students and taxpayers suffer the consequence while the schools continue to profit.”

According to the complaint, S&C told prospective students interested in training to work in a medical office that virtually all students there would achieve jobs in that field when, in fact, it was counting jobs in fast food and big box stores toward its placement percentages. While S&C allegedly promoted in statements and recruitment material that between 70 and 100 percent of graduates received jobs in a medical office, the AG’s investigation found that, in reality, less than 25 percent of graduates found that type of work.

Following its initial access to federal funding, S&C’s enrollments and revenues increased greatly. Between 2006 and 2010, S&C’s revenue more than quintupled from approximately $1.9 million to more than $10 million, yet educational outcomes allegedly suffered.

The complaint alleges that a number of students thought that they would receive clinical training and be certified in weeks to work directly with patients in hospitals and doctor’s offices, but not a single student obtained a job in the clinical field upon graduation, and very few obtained jobs in a medical office. Of 183 students that took part in S&C’s “Medical Office Assistant” program – paying on average $14,000 in tuition using federal loans – only 22 obtained medical office jobs. Most students did not find work that paid well enough to pay off their debts.

In its advertising and promotional materials, and in statements during recruitment, S&C never told students that classes were self-taught, according to the complaint.  After enrolling, the AG’s complaint alleges that students were placed at computers and provided with a set of books or manuals to follow and received little or no other instruction.

The AG’s Office also alleges that S&C misled students by using the title “Medical Assistant” in promotional materials, since the school never offered such a curriculum. School advertisements featured women wearing medical scrubs and holding stethoscopes and medical charts, but the school never offered that type of clinical instruction, such as how to use a stethoscope or chart a patient’s medical care.

It is also alleged that S&C made other misrepresentations concerning its medical office training programs, including exaggerations as to how long it would take to complete the program, the extent of its career services and internship opportunities, and the cost of certification test fees.

The complaint seeks restitution to affected students, penalties, and attorney’s fees, as well as changes in S&C’s advertising, marketing and placement calculation methods. Investigations of other for-profit educational institutions operating in the state remain ongoing.

AG Coakley has launched a comprehensive investigation into the for-profit college industry and implemented an extensive education campaign for students. AG Coakley has significant concerns about the for-profit college business model in Massachusetts and across the country. Recent government reports highlight these troubling trends:

  • For-profit programs are expensive - certificate programs at for-profit schools average 4.5 times the cost of comparable programs at public schools.
  • The business model of for-profit schools focuses on students from low income families and those, including veterans, who are eligible for federal funds.  For-profit schools receive most of their revenue from the federal taxpayers. Pell grants to for-profit schools increased from $1.1 billion to $7.5 billion between 2000 and 2010.
  • During 2009-2010, the 15 publicly traded for-profit education companies received 86% of their revenues from federal taxpayer funds, including Title IV grants and veterans benefits Taxpayer investment in for-profit schools was at least $32 billion in 2009-2010.
  • Students at for-profit institutions typically have poor outcomes and higher loan default rates.  Nearly a quarter of for-profit students default on their loans within three years of starting repayment.  Nearly half of all dollars lent to students at for-profit schools will end up in default.
  • Overall, the 12% of students at for-profit schools nationally comprise about 48% of all student loan defaults.
  • For-profit schools spend large proportions of their revenue on marketing instead of instruction. In 2009, marketing consumed almost 23% of for-profit schools’ revenue, 19% went to profits, and just 17% of revenue was spent on instruction of students.

AG Coakley has made holding for-profit schools accountable for abuses and deceptive marketing a priority for her office. Last month, AG Coakley signaled her support for proposed federal legislation which would stop for-profit schools from spending taxpayer money on marketing.

AG Coakley also believes that additional regulatory and other safeguards should be considered to further protect students and taxpayers. Among the policy recommendations to be considered are:

  • Ensuring that proper resources are put into the training and education of students by establishing an Instruction/Teaching funding ratio;
  • Establishing limitations of state loan and grant funds to for-profit colleges;
  • Further protecting against deceptive marketing tactics by updating 93A regulations to include degree-granting for-profit institutions; and
  • Ensuring greater transparency by requiring schools clearly disclose whether they are for-profit institutions and establishing a clear methodology to calculate placement statistics.

In June 2012, AG Coakley obtained $225,000 for the state in a multistate settlement with QuinStreet which resulted in the deceptive for-profit marketing website GIBill.com being taken down and handed over the U.S. Department of Veterans Affairs.

This matter is being handled by Assistant Attorneys General Peter Leight and Jenny Wojewoda, Division Chief Glenn Kaplan, Mathematician Burt Feinberg and Legal Analyst Diana Hooley, with assistance from Legal Analyst Jennifer Snow, all of the Attorney General’s Insurance & Financial Services Division.

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