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They Took My Choice Away’: Victims of For-Profit Colleges Find an Ally

Student Defense, a litigation and advocacy organization, is working to ensure defrauded students have their day in court.

Emmanuel Dunagan, 26, was just months from earning his bachelor’s degree when he learned from an email that the Institute of Art had lost its accreditation six months earlier. Two weeks later, students found out the school would be shutting down. “It was hell on earth,” he said. “The news in itself was devastating, but then to watch everyone mid-crisis, scrambling, trying to figure out what their next move was — watching the campus unravel was really, really hard.” (Courtesy photo)

In 2018, the future looked promising for Emmanuel Dunagan. The 26 – year-old was studying illustration and design at the Illinois Institute of Art, Chicago, and was just months from earning his bachelor’s degree. As an LGBTQ Black man who grew up in a low-income community, Dunagan said it wasn’t easy for him to work his way to a community college and then transfer to the Institute of Art, and he was grateful to have the opportunity. He was involved on campus, serving as the president of a student group focused on sustainability, and looked forward to earning his degree and using it to find a career in the arts. 

But in July, with just a few credits remaining, Dunagan learned that he would not be earning the degree he’d been expecting, which had cost him more than $80,000.

Dunagan learned from an email that, unbeknownst to him and the other students, the Institute of Art had lost its accreditation six months earlier. The college chain behind the Institute of Art had been attempting to convert from a for-profit to a nonprofit institution as part of its purchase by the Dream Center organization and didn’t meet a requirement to improve the quality of its instruction. Two weeks after learning that news, students found out the school would be shutting down. Dunagan was blindsided, and he questioned whether his unaccredited degree would be worth anything. 

It was hell on earth,” he said. The news in itself was devastating, but then to watch everyone mid-crisis, scrambling, trying to figure out what their next move was — watching the campus unravel was really, really hard.” 

Without other options for schools to transfer to where he could continue to study illustration and design, Dunagan decided to finish his final classes at the Institute of Art. Dunagan said he worried employers would question his credentials and lamented that he’ll have to take 10 steps back” and earn more college credits if he ever wants to go to graduate school. 

I didn’t need people taking options off the table for me,” he said. There were schools that I wanted to go to that I couldn’t afford when I was entertaining the idea of continuing my education, so I didn’t need the school that I attended to also say, Gotcha! We promised this thing but we won’t actually give it to you.’ They took my choice away.”

It wasn’t until Dunagan connected with a legal group called the National Student Legal Defense Network (Student Defense) that he was able to fight back against the institution that he believed deceived him and took away his options. Dunagan became a plaintiff in a lawsuit Student Defense filed in December 2018 against the Illinois Institute of Art and its parent company. The group also sued the U.S. Department of Education for allowing federal aid to go to the unaccredited university. Eventually, Student Defense obtained $11 million in cancellations and refunds for the loans Emmanuel and other students took out in the period when the school was unaccredited.

I don’t even know how to sum up how grateful I am … and thankful to Student Defense,” Dunagan said. They have worked tirelessly and relentlessly to seek justice around this malpractice.”

A Real Need’

Student Defense was co-founded by attorneys Aaron Ament, president; Dan Zibel, vice president and chief counsel; and Alex Elson, senior counsel. Ament and Zibel are veterans of the Department of Education and the Obama administration, and Elson is a veteran of the Obama administration. They formed the nonprofit in 2017 in the wake of Donald Trump’s election victory. Ament said he realized that under Secretary of Education Betsy DeVos, the Department of Education would pursue a deregulatory agenda, chipping away at the way the federal government oversees education funding and eliminating key protections for students, especially students of color and those from low-income communities. 

There was a real need for an organization both to amplify advocacy efforts and then to use strategic litigation against the government and the industry,” he said. 

Since 2017, Student Defense has targeted both the government and private corporations with lawsuits on behalf of students of for-profit colleges and other predatory school chains, holding them accountable for defrauding, deceiving, and manipulating students. 

With an administration that actively sought to roll back regulations around for-profit schools, we saw a need for robust litigation capacity that could hold the Department accountable for protecting students from predatory institutions,” said Kirby Smith, vice president at Arnold Ventures. After an initial investment by Arnold Ventures, Student Defense was able to hire a team of experienced attorneys, attract other donors, and quickly start winning victories in court, earning a reputation as a fierce defender of the rights of students.

The work has become even more critical during a time when enrollment in for-profit colleges is rising quickly. Students pay more and benefit less from for-profit education than from education in other sectors,” Stephanie Riegg Cellini, a professor of public policy and economics at George Washington University, wrote in a November report for the Brookings Institute about the increasing number of students choosing for-profit education. The majority of studies on employment and earnings gains find worse outcomes for for-profit students relative to similar students in other sectors.”

During testimony before Congress in March about the proliferation of for-profit schools during the COVID-19 pandemic, Zibel pointed to the importance of Student Defense’s litigation work in this unprecedented time. 

Enrollment at for-profit colleges is increasing, while enrollment in higher education more broadly is declining,” he said. These statistics paint a troubling picture, when considering the overwhelming evidence that for-profit institutions provide poorer outcomes than other forms of higher education.”

Ament called the case against the Illinois Institute of Art, Chicago, several other Art Institutes, and two other chains of schools operated by the Dream Center Education Holdings one of the most impactful cases the group has taken on. After Student Defense sued the Dream Center for lying to its students, the company filed for bankruptcy and was put under receivership in Ohio. Student Defense intervened in those proceedings on behalf of students who went to Argosy University, another chain of schools owned by the Dream Center. Through the course of that proceeding, Student Defense learned that $16 million of student stipend funds were missing, triggering an inspector general investigation and oversight hearings by Congress.

The federal government basically terminated the Argosy chain and their federal funds and cancelled the loans that were made that year to all the Argosy students. That shut down the Argosy chain and then the receivership proceeding shut down the rest of the schools,” including the Art Institutes, Ament explained. 

Student Defense also filed claims against individual owners and executives of the Dream Center schools, and those claims are still being litigated. 

If we’re successful, it would be one of the first times that these executives of one of the large nationwide chains have ever been held personally liable,” Ament said. 

While Dunagan said he is pleased to have had some of his loans returned, he doesn’t believe real justice will have been served until the people who ran his institution are punished. 

I would like the individuals who are responsible for this, who have names and faces and who have had some participation in it all, I would like them to be prosecuted to the full extent of the law,” he said. I want them to be dealt with in the way in which people who look like me are dealt with in the court of law under far less offenses.” 

I would like the individuals who are responsible for this, who have names and faces and who have had some participation in it all, I would like them to be prosecuted to the full extent of the law. I want them to be dealt with in the way in which people who look like me are dealt with in the court of law under far less offenses.
Emmanuel Dunagan defrauded student

Taking on the Government

During the four years of the Trump administration, Ament and his colleagues found themselves facing off against the administration in court on several occasions. 

Ament said the case that he thinks brought about the biggest impact was one filed against the Department of Education and DeVos, to force them to implement the automatic closed school discharge regulations.

First published in 2016, the regulations mandated that when schools like Corinthian Colleges close, students get the balance of their loan discharged or forgiven if they left the institution within 120 days (or 180 days after changes went into effect in July 2020) of when the school shut down. Early in her tenure, DeVos refused to implement the regulation and then in August 2019, she repealed it.

But before she repealed it, Student Defense filed a lawsuit on behalf of tens of thousands of students and were successful in forcing her to implement the regulation. 

The last data I saw, was that over $336 million was discharged to [approximately 30,000] students who had attended these schools like Corinthian and ITT that were closed, and I think the number has gone way up since,” Ament said.

Student Defense also sued the Department of Education when DeVos repealed in June 2019 the gainful employment regulation, which was designed to make sure that students leaving for-profit institutions and other certificate programs make enough money in their careers to pay back their loans. Schools that don’t meet the requirement become ineligible for federal funds. 

Student Defense brought a case on behalf of two individual students in California, the California Federation of Teachers, and the American Federation of Teachers challenging that repeal, Ament said. The group also worked with the California attorney general’s office, which brought their own case designated as related to theirs.

The suit has survived a motion to dismiss in September, paving the way for Student Defense to restore the protection for its clients and for millions of students who enroll in for-profit and career college programs every year, the group said. 

Whether that case results in the old rule being reinstated or a catalyst for the administration to commence new rulemaking, we’re hopeful that we’ll see the gainful employment rule reinstated,” Ament said.

We focus a lot of our litigation efforts from the perspective of how can we help the most people and at the same time, create lasting and far-sweeping policy change.”