Education Industry Reporter

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By David P. Lewis on Posted in Accreditor News, Education Technology, Higher Education News, International News, K-12 News, Uncategorized

CONTRIBUTED BY
Dennis Cariello
David P. Lewis

We launched DLA Piper’s Education Industry Reporter about six months ago.  Our goal, which has largely been successful, has been to produce a legal blog “plus” – a site that includes regular, original content written by the attorneys in DLA Piper’s Education Group, as well as updated news feeds regarding current issues affecting the education industry, a calendar of industry events, and links to other education sector resources.  We have received many compliments on the site, as well as suggestions for improvements that we are considering and working on.

For a complete explanation of the features of the site, go here.  For now, just a quick reminder.  If you want to read new posts on the site but prefer not to have to navigate to the site each time to check for new content, simply enter your email address in the orange box on the right entitled “Subscribe to this Blog via RSS or by Email.”  By subscribing, you will receive a single, early-morning email containing just those new entries (if any) posted the day before (if no new entries have been posted, then no email). 

Again, we hope you enjoy the site. 

 

How the JOBS Act Eases Access to Capital

By David P. Lewis on Posted in Education Technology, Uncategorized

CONTRIBUTED BY
David P. Lewis

Yesterday, my colleagues and I in the DLA Piper Phoenix office filed one of the first IPOs in the country utilizing the new “IPO on-ramp” provisions of the JOBS Act that was signed into law on April 5.  As our client can attest, the law can provide material benefits to companies seeking to raise capital or go public (including the many great companies attending the ASU Education Innovation Conference on April 16-18) and is a welcome development. 

For those interested in learning more about the new law, I invite you join us for a webinar covering key aspects of the JOBS Act.  This complimentary, one-hour webinar will take place at 9:00a.m. (Pacific time) on Wednesday, April 18 and will cover the key provisions of the law.  You can register here. 

Note that all registered persons will receive an email with information on how to access a recording of the webinar, so, if you are interested but cannot attend the live version, you should register anyway in order to receive the recording information.

 

 

The New CFPB Paying for College Cost Comparison Tool

By Dennis Cariello on Posted in CFPB, Department of Education, Financial Aid (Loans & Grants), Higher Education News, Higher Education Policy

CONTRIBUTED BY
Dennis Cariello

The Consumer Finance Protection Board (CFPB) has released its beta version of a college cost comparison tool to help students and families with selecting a college.  The tool allows you to compare three schools at the undergraduate level (two or four year) and tries to predict, on average, what the net cost for going to the school will be (net of non-loan financial aid) and what the monthly payment associated with any debt from the school will be.

While I have concerns about this tool — and I imagine I will more concerns as I continue to play with it — I can see how this data can be helpful.  A net calculator can be very helpful for families looking at universities and the ability to compare institutions on one page would be a nice additional feature.  In that spirit I plugged in three New York State schools — a public university, a proprietary university and a private non-profit university — to see what would happen.  While some of the data was helpful – particularly having the net price in a understandable format – there are a few areas for improvement.

The CFPB characterizes the estimated debt as, presumably, “low”, “medium”, and “high”.  I say presumably because all of the schools in question were rated as “high” ($11,000 for the public school, $30,000 for the proprietary school and $31,000 for the private school).   This characterization is “based on your estimated debt and the average national salary for Bachelors graduates, not school specific.” Unsurprisingly, according to the CFPB the average private and public university also leave students with a debt level of “high.”  Given this, a reasonable student would likely walk away thinking the government was telling her that she shouldn’t go to a four-year school, lest she graduate with high debt levels.  This is clearly a problem that must be fixed in version 2.0 of the program.  While we shouldn’t pretend that paying loan bills is easy, we also shouldn’t be discouraging students from going to a four-year school by labeling the debt in this manner.  Moreover, given that this does not take into account the school location (and regional salary differences) or the program being considered (and the salary differential for that program), students and families are very likely to get the wrong idea about this data.

The other comment relates to the CFPB’s attempt to equate the estimated monthly debt payment to something the would-be student borrower would understand.  To be sure, there are numbers that are beyond most people’s ability to conceptualize.  While a trillion, billion or even a million might be tough to fathom, the debt payment for the schools in question were in the hundreds.  I sincerely hope it is not beyond the understanding of potential college students to understand what $600 or $900 means without breaking this number down into a function of “$50 textbooks” the student could purchase each month.  It seems to me that $600 or $900 has enough relevance as a dollar figure to the average college freshman that it need not be broken into a smaller unit.  Many – not all, but many – have seen that much money before.  Moreover, the opportunity cost associated with $900 is apparent to most high school seniors – $900 is a computer, an iPad, a first car, or, I’d imagine, about a month’s pay before taxes.  Breaking $900 down into a function of $50 textbooks is more likely to confuse the audience than than clarify what that payment means to them.  Note, I am not advocating saying the loan payment “is like buying an iPad a month” either. Doing so is likely to drive them away from school even more.  All I am saying is that the number is readily understandable and needs no further explanation.

Again, I do think the idea is not a bad one and I congratulate the CFPB on this first attempt  – as they admit, it is a beta version.   I do hope they consider these thoughts, however, which I hope will make it a more useful tool for students and families in choosing a college.

DLA Piper to Sponsor ASU’s Education Innovation Summit

By David P. Lewis on Posted in Education Technology, Higher Education News, K-12 News

CONTRIBUTED BY
David P. Lewis

We are pleased to be the exclusive law firm sponsor for Arizona State University’s Education Innovation Summit taking place April 16-18 in Scottsdale, Arizona. One of the leading education technology conferences in the country, the Education Innovation Summit brings together nearly 100 education and education-focused technology companies and hundreds of other education industry thought leaders, entrepreneurs, investors and educators focused on driving a K-12 and higher education revolution through innovation. The keynote speakers include Michael Milken (Chairman of The Milken Institute), Reed Hastings (CEO of Netflix), and Jeb Bush (former Governor of Florida and founder and chairman of the Foundation for Excellence in Education). Other top sponsors of the event, along with DLA Piper, include GSV Advisors (ASU’s partner in the conference), the Bill & Melinda Gates Foundation, Academic Partnerships, Pearson, Scholastic, Apollo Group, and ABS Capital Partners, among others.  Please see the conference website for a complete list of the sponsors, participating companies, agenda, and panels.

Joining me (Phoenix office) and Dennis Cariello (New  York office) at the Summit will be a number of our colleagues who actively practice in the education, technology and venture sectors , including Itai Nevo (Boston office), Beni Surpin (San Diego office), Brad Gersich (East Palo Alto office), and Ian Westberg from DLA Piper’s Venture Pipeline unit. Several of us will also be serving as judges in the conference’s business competition. If you are attending, we will look forward to seeing you there.

Department of Defense Revises Memorandum of Understanding for Higher Education; Includes New Requirements on Schools

By Dennis Cariello on Posted in Higher Education News, Higher Education Policy, Military Education

CONTRIBUTED BY
Dennis Cariello

According to a Department of Defense release, the 90-day extension related to the implementation of the Tuition Assistance Program Memorandum of Understanding ended on March 30, 2012 and a revised MOU will be implemented by Summer 2012.  Although the new MOU has not been released yet, the release identifies some revisions that will be in the new MOU:

• Prior to enrollment the schools will disclose all policies regarding admissions, transfer of credit, residency requirements, as well as the program costs to including tuition, fees and other charges to the service member.
• Prior to enrollment, schools will provide service members access to an institutional financial aid advisor who will provide a clear and complete explanation of available financial aid to include Title IV, and appropriate loan counseling before offering, recommending, or signing up a student for a school loan.
• Schools will have in place a policy that bans aggressive marketing and inducements and refrain from aggressively marketing to military students or use inducements to encourage military students to enroll in their school.

it is unclear what constitutes “aggressive marketing and inducements” and what will what will have to be included in any policy banning such conduct.

The DOD is currently working with the Pentagon to complete the revisions and will be post the revised MOU on the DoD’s web page.  As the release notes, “the Defense Department anticipates the new policy will go into effect during the summer of 2012. Until that time, academic institutions participating in the Tuition Assistance Program will continue to receive tuition assistance, regardless of whether they have signed the original Memorandum with the Department by the original due date of March 30, 2012 or not. Once the new policy goes into effect in summer of 2012, only those schools that have signed a Memorandum of Understanding with the Department (either the original Memorandum or the new, revised Memorandum) will be able to receive tuition assistance.”  Importantly, “institutions that have signed or are in the process of signing the original Memorandum will not have to re-sign nor make changes to the document.”

Court Dismisses Lawsuit Against NY Law School

By Dennis Cariello on Posted in Department of Education, Higher Education News, Higher Education Policy, Law Schools, Misrepresentation

CONTRIBUTED BY
Dennis Cariello
On March 26, the New York Supreme Court (the state’s trial level court) granted the motion to dismiss filed by New York Law School in Gomez-Jiminez v. NY Law School. While we hope to have more commentary soon, I think it fair to say that this decision will make the other cases more challenging to maintain.  While the court rejected an argument based on compliance with the American Bar Association’s standards for reporting of job placement figures (largely based on the wording of the relevant NY statute), it did find that:

plaintiffs could not have reasonably relied on NYLS’s alleged misrepresentations, as alleged in their fraud and negligent misrepresentation claims, because they had ample information from additional sources and thus the opportunity to discover the then-existing employment prospects at each stage of their legal education through the exercise of reasonable due diligence; and

plaintiffs’ theory of damages, that is, an award of the difference between what they paid for their law degree and an amount representing its ostensibly lesser intrinsic worth because the degree has not sufficed as an entrance ticket for the type of jobs plaintiffs hoped to obtain, is entirely too speculative and remote to be quantified as a remedy under the law. This is especially true here since there has been a supervening event, the 2008 Great Recession and its aftermath, which has wreaked havoc throughout the legal job market and upset the plans of most recent law graduates wherever they have attended law school.

Given that those criticisms are likely applicable to all of the law school misrepresentation cases — absent actual fraud and concealment of the true job placement numbers — this may well make these cases incredibly difficult to maintain.

Ninth Circuit Upholds Validity of Arbitration Clause in Private Student Loan Agreement

By Dennis Cariello on Posted in Case Notes, Higher Education News, Litigation News

CONTRIBUTED BY
Dennis Cariello

Yesterday, the Ninth Circuit Court of Appeals, in Kilgore v. Key Bank National Ass’n, reversed a district court’s denial of a motion to compel arbitration, and remand the case to the district court with instructions to stay the case and compel arbitration.  In so doing, the Court held that, pursuant to the Supreme Court’s recent decision in AT&T Mobility, Inc. v. Concepcion, ___ U.S. ___, 131 S. Ct. 1740 (2011), the Federal Arbitration Act (“FAA” or “Act”) preempts California’s state law rule prohibiting the arbitration of claims for broad, public injunctive relief  (the “Broughton-Cruz” rule, see Broughton v. Cigna Healthplans of California, 988 P.2d 67 (Cal. 1999), and Cruz v. Pacificare Health Systems, Inc., 66 P.3d 1157 (Cal. 2003)).  In addition, the Court found that the arbitration clauses (quoted below) were no unconscionable under California law. Continue Reading

Senators Ask Veterans Adminstration to Trademark “GI Bill”; Attempt to Impact Proprietary Schools Usage of Military Aid to Students

By Dennis Cariello on Posted in 90-10 Rule, Higher Education News, Higher Education Policy, Military Education, News from the Hill

CONTRIBUTED BY
Dennis Cariello

Earlier today, more than a dozen senators sent a letter to the Department of Veterans Affairs to trademark the phrase “GI Bill,” claiming that for-profit schools are abusing the term in a “deceptive” effort to lure service members and their healthy government benefits.   Health, Education, Labor and Pensions Committee Chairman Sen. Tom Harkin (D-Iowa) sent the letter together with 13 other Democratic senators calling on Veterans Affairs Secretary Eric Shinseki to “exert control” over how the term GI Bill is used.  This follows the HELP Committee majority report last month that showed about half of the military’s tuition assistance dollars were going toward proprietary colleges.