For Immediate Release - June 25, 2014

AG Coakley Announces Finalization of New For-Profit and Occupational School Regulations

Regulations Designed to Curb Deceptive and Unfair Practices, Increase Protections for Prospective Students

BOSTON – Designed to address difficulties experienced by students when enrolling in certain Massachusetts schools, Attorney General Martha Coakley announced today a series of new regulations pdf format of 940 CMR 31.00
that enhance consumer protections governing the for-profit and occupational school industry.

The final regulations, published in the Massachusetts Register on June 20, will help ensure that all schools engage in legitimate and responsible business practices that both protect consumers from harm, and help them make well-informed decisions before taking on student debt.

“Our continued investigation of the for-profit school industry has clearly shown that stronger standards around consumer protection are necessary,” AG Coakley said. “These new comprehensive regulations achieve that, and with the right protections in place, prospective students in Massachusetts can make sound and informed decisions before committing their time and money in pursuing a higher education.”

In November 2013, AG Coakley filed the proposed amended regulations to better protect students from potentially unfair or deceptive practices. The regulations were finalized following an extensive public process, including a public comment period and two hearings. Through this process, the AG’s Office received feedback on the proposed regulations from various stakeholders, including schools, industry groups, consumer groups, former and current students, and veterans.

The new regulations require all for-profit and occupational schools in Massachusetts to provide accurate information to the public, prohibit misleading advertising practices, and address unfair lending practices. The AG’s Office also worked with other relevant stake regulators, including the Division of Professional Licensure and the Board of Higher Education, to ensure consistency across all state regulations.

The updated and amended regulations, now in effect pursuant to Massachusetts General Laws Chapter 93A, include:

  • Scope: Creating broader regulations that apply to all for-profit and occupational schools which advertise to and enroll students in Massachusetts.
  • Disclosures: Schools are required to disclose, in their advertisements and recruitment literature, accurate and readily comparable information about tuition and fees, employment statistics, graduation rates, and program completion time.
  • Prohibited practices: Schools are prohibited from using high pressure sales tactics, including repeated solicitations through phone calls and text messages, and misrepresenting the role of recruitment personnel by referring them to “counselors” or “advisors.”
  • Lending: Additional language pertaining to unfair and deceptive acts and practices involving student loans and financial aid.

In April, the AG’s Office filed a lawsuit against for-profit school Corinthian Colleges, Inc. and Corinthian Schools, Inc., which operate Everest Institute, over allegations that it misrepresented its training programs and job placement rates in order to increase profits, and pushed students into high-interest subprime loans.

In November 2013, the AG’s Office filed a lawsuit against American Career Institute (ACI) alleging the school falsified student signatures, enrollment records, attendance, and grades to receive government-funded student loan proceeds, and failed to provide students the course material and training for which they incurred tens of thousands of dollars in debt.

AG Coakley reached a $425,000 settlement in October 2013 to reimburse former students of Sullivan & Cogliano Training Centers, Inc., a Brockton-based for-profit career school, for allegedly misrepresenting job placement numbers and making other misleading statements about its medical field training programs. The settlement resolved the AG’s lawsuit filed earlier that year.

In April 2013, AG Coakley launched Eliminate Deceptive Education Business Tactics (D.E.B.T.), an extensive consumer protection campaign with free educational trainings across the state and a new website offering resources for consumers related to for-profit schools.

In March 2013, AG Coakley signaled her support for proposed federal legislation which would stop for-profit schools from spending taxpayer money on marketing. 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 to the U.S. Department of Veterans Affairs.

ADDITIONAL COMMENTS

Senator Eileen M. Donoghue

“As Senate Vice-chair for the Joint Committee on Higher Education and Senate Chair for the Subcommittee on Student Loans and Debt, I have become increasingly familiar with the financial issues surrounding for-profit and occupational schools. Although there may be no silver bullet for this broad issue, the Attorney General’s proposed regulations will alleviate the confusion and deception surrounding certain higher education loans and indebtedness. Increased transparency, honest disclosures, and correcting unfair lending practices are important steps that will help clean up the market and create a better, more cost effective environment for Massachusetts students and their families. I look forward to working with the Attorney General’s office to protect students while offering safe pathways to personal and professional success.”

Boston City Councilor At-Large Ayanna Pressley

“Since I joined the Council my focus has been on poverty and how to support low income families in getting on a pathway to self-sufficiency. A reoccurring thread continued to emerge - many of these heads of households, overwhelming women, immigrant and minority, had attended one or more for profit colleges. These individuals had sought to do the right thing by furthering their education to increase their job prospects and were misled by deceptive practices. The damage to these individuals, their families, and our community is far reaching. I am thrilled to hear that regulations governing for-profit and occupational schools have been strengthened. I applaud and thank Attorney General Coakley for her work and partnership on this important issue for families.”  

Robyn Smith, Of Counsel with the National Consumer Law Center

“By issuing these regulations, Attorney General Coakley has taken a strong stand against for-profit school deception. These rules will provide an additional tool the Attorney General may use to continue her fight to protect vulnerable students from unscrupulous schools. We look forward to working with the Attorney General and her office to push even harder for reforms to hold schools accountable for inferior outcomes and provide comprehensive relief to borrowers."

Mary Kay Henry, president of the 2.1 million-member Service Employees International Union
“Today Massachusetts families and students have new protections against deceptive practices by the for-profit and occupational college industry. We commend Attorney General Coakley for her leadership and moving the Commonwealth to ensure accountability to students--many of whom are often low-wage workers--and taxpayers. Far too often, dishonest recruiting practices, high tuition costs, low quality, high dropout rates and failure to deliver on promised outcomes hurt working people struggling to improve their lives and support their families. While for-profit colleges and universities have a potentially important role in helping working adults meet the growing demand for higher education, it is important that these institutions are held accountable for their promises to the public.”

Elisabeth Babcock, President and CEO of Crittenton Women’s Union, an organization that helps low-income women and their families in Massachusetts achieve economic self-sufficiency

“We believe that these new regulations will help ensure that our clients are protected from misleading advertising and unfair lending and recruitment practices when enrolling in for-profit and private occupational schools. We want to thank the Attorney General for her work in enhancing these important protections for consumers pursuing a higher education.”

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