Students and Forced Arbitration: Signing Away Your Rights

For-profit schools often set up a process that makes it less likely that grievances will be settled fairly.

Source: Don’t Force Students to Sign Away Their Rights

Class actions are an essential check on businesses. The information about the Trump University programs might not have come to light had it done what for-profit schools typically do: require students to sign contracts that bar them from joining with others to go to court and force those with grievances into an arbitration system that inevitably favors the schools.

By shielding schools from liability when they defraud or deceive students, these mandatory arbitration clauses are an invitation to shady business practices. The Department of Education, which is expected to issue rules on this matter soon, should ban the clauses outright.

The case for doing so is laid out in a study of enrollment contracts at 271 schools published this spring by the Century Foundation, a nonpartisan research group. The study found that arbitration clauses and other measures that limited the legal rights of students were rarely used in traditional nonprofit colleges or even for-profit schools that do not receive federal funds. But they are frequently placed in enrollment contracts by for-profit schools that participate in the federal financial aid program.


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