Saint Louis University School of Law Scholarship Commons All Faculty Scholarship 2010 "Your Results May Vary": Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations Aaron N. Taylor Saint Louis University School of Law Follow this and additional works at: https://scholarship.law.slu.edu/faculty Part of the Education Law Commons Recommended Citation Taylor, Aaron N., 'Your Results May Vary': Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations (2010). 62 ADMIN. L. REV. 729 (2010). This Article is brought to you for free and open access by Scholarship Commons. It has been accepted for inclusion in All Faculty Scholarship by an authorized administrator of Scholarship Commons. For more information, please contact [email protected], [email protected]. ADMINISTRATIVE LAW REVIEW "Your Results May Vary": Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations Aaron N. T qylor Reprinted from Administrative Law Review Volume 62, Number 3, Summer 2010 Cite as 62 ADMIN. L. REV. 729 (2010). The Administrative Law Revieiv is a joint publication of the ABA Section of Administrative Law & Regulatory Practice and the Washington College of Law, American University. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. "YOUR RESULTS MAY VARY": PROTECTING STUDENTS AND TAXPAYERS THROUGH TIGHTER REGULATION OF PROPRIETARY SCHOOL REPRESENTATIONS AARON N. TAYLOR* TABLE OF CONTET\'TS Introduction ............................................................................................. 730 I. I-Iigher Education l\!lisrcprcsentations and Fraud ......................... 733 A. Inflated Placement and Completion Rates .............................. 735 B. Inappropriate Con1pcnsation Arrangements ........................... 736 C. Entrance Test ln1propricties .................................................... 739 D. Cohort Default Rate Manipulation ......................................... 740 II. The Con1n1oditization of Higher Education .................................. 742 A. Kno\vlcdgc-Bascd Economy .................................................. 744 B. Nevv Technologies................................................. .. 745 C. Globalization ....................................................................... 746 D. Ncolibcral Financial Aid Policies ........................................... 747 E. Changing Student Populations .............................................. 748 F. Rising Tuition. ................................................. ........ 749 G. Demands for Accountability .................................................. 750 II. Ncvv I-Iigher Education Providers ........................................... 751 III. The Rise of Proprietary Colleges .................................................. 752 A. Title IV Expansion .................................................................. 753 * Assistant Dean for A.dn1issions and Scholarships and Adjunct Professor of Education Law, University of Arkansas at Little Rock \1Villiam H. Bowen School of Law. B.t\., i\Torth Carolina A&T State University;J.D., Howard University School of Law; Ed.D., Vanderbilt University. The Author wants to thank Lisa S. Taylor and Theresa lvL Beincr for their helpful feedback and guidance. He thanks Latrcnia Byrd and Elizabeth Davis for their research assistance. 729 Number 3 •Volume 62 • Summer 2010 •American Bar Association •Administrative Law Review '"Your Results May Vary': Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations" by Aaron N. Taylor, published in the Administrative Law Review, Volume 62, No. 3, Summer 2010. © 201 O by the American Bar Association. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. 730 AD.\!J.\JSTR..17/FF; L·1Iv1?.ET1EI 1• [62:3 B. Students......... ..................... ................................ 753 C. Outcon1cs ............................................................................. 754 D. Industry.......................................... .................................. 756 E. Profitability ......................................................................... 75 7 F. Operational Efficiencies ...................................................... 758 G. Emphasis on Recruitment.............. .............. ............. ..... 759 IV. The Need for 'fighter Regulation of l-Iighcr Education Rccruitn1cnt and Jvfarkcting .. ........................................ 760 A. The Susceptibilities of the lvlarket ........................................ 761 B. The Costs of Failure ............................................................ 761 V. Inadequate Safeguards ................................................................ 763 J-\. ~fort La\v ............................................................................. 764 B. Contract La\v .. .................. ................ .............. .............. .. 766 C. Consun1cr Protection ........................................................... 767 D. The "Triad"............................ ................................. 768 VI. Regulating I-Iighcr Education Representations ............................. 769 A. Proposals................. ................ .............. ................ 770 B. Relevant Oversight Agencies ................................................ 770 I. The Department of Education ........................................ 770 2. The Federal Trade Con1n1ission ....................................... 77 l 3. State Regulatory Agencies .............................................. 771 4. Accrediting Agencies ...................................................... 772 5. Self-Regulatory Bodies ..................................................... 773 C. Discussion ............................................................................ 77:3 1. Requiring Disclain1ers .................................................... 775 2. Expanding FrC Proprietary School Guides ........ 778 3. Encouraging Self-Regulation ........................................... 779 4. Requiring Affirn1ative Disclosures ................................... 780 5. Expanding Disclosures .................................................. 781 Conclusion.............. ................... ............... ........................... 782 hTRODGCTlO>: "(:-raduate vvith a career!" "fvlakc n1ore cash!" "Change your life!" "It's easy! Just pick up the phone!" These were likely some of the exhortations Trina Thon1pson heard (between episodes of The Jerry Spiinger Show and Maury Pavich) before deciding to enroll at ~1Ionroe College-a career-focused propricta1y (for- Number 3 • Volume 62 •Summer 201 O •American Bar Association •Administrative Law Review "'Your Results May Vary': Protecting Students and Taxpayers Through Tighter Regulation of Proprietary School Representations" by Aaron N. Taylor, published in the Administrative Law Review, Volume 62, No. 3, Summer 2010. © 2010 by the American Bar Association. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electron'1c database or retrieval system without the express written consent of the American Bar Association. 2010] T!Gf!TER }{EUl 7.·J T!O.Y OF ,)'C!-!OOL ]{EPRESEA7:,1TIO. \:S' 731 profit) college vvith can1puscs in Nc\V York and the Caribbean. r Trina likely \Vantcd to start a career, n1akc more 1noncy, and change her life vvhcn she enrolled in Nionroc's bachelor of business administration program in April 2008.2 But after graduating \Vithout a job in April 2009,'.l Trina realized that achieving her objectives \vas not as easy as she had been led to believe. According to 'frina, her 2. 7 GPA and her "good" attendance record should have resulted in job intcrvic,vs and eventually cn1ployn1cnt.-l­ Shortly thereafter, she filed a Ja,vsuit against l'vlonroc alleging inadequate carccr-placcn1cnt assistance and seeking a tuition rcin1burscn1cnt of $70,000.5 Trina's la,vsuit, "\vhilc laughable in sonic respects, is nonetheless reflective of the con1111oditization of higher education-a trend that pron1otcs the endeavor sin1ply as a n1cans to an encl instead of a con1plicated undertaking. In that vein, the la,vsuit is also instructive of risks associated "\vith the aggressive and often deceptive pron1otion of future benefits by colleges havvking their 'vares. Representations niadc by son1c colleges rival the nlost optin1istic-and often unfounded-diet pill claims. The end result is thousands of "Trinas" entering higher education full of misguided optimisn1 and leaving bitter, unfulfilled, and n1ost of all, in debt. Trina is lucky-at least she earned a degree. IVfost others in her position do not.6 Individuals vvho arc induced to enroll in an institution based on misrepresentations arc allo"\vcd little recourse to recoup damages they n1ay incur.7 The courts have been very reluctant to recognize certain causes of action against higher education institutions.B And regulatory