On October 18, 2023, the Federal Trade Commission (“FTC”) announced that that they had filed a complaint and entered into a stipulated order with a for-profit college and its parent company. Under the consent order, the college will cancel $3.4 million in student debt, resolving allegations that it made false claims about post-graduation job placements and issued deceptive “income share agreements.” The State of New Jersey also brought separate charges against the college and parent company.
According to the FTC, since 2018, the college has advertised that their job placement rates are above 80% and even up to 90% in their website, social media, and email campaigns, despite the actual placement rate being substantially lower. Likewise, the FTC claims that the school advertised partnerships with prominent employers, many of which had no partnership with the school.
Beyond the alleged false advertisements, the FTC claims that the school encouraged the use of income-share agreements that required students to pay a percentage of their future income in exchange for tuition coverage, but failed to include legally mandated disclosures. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, commented that “[c]ompanies that skirt long‑standing consumer protection laws when offering new financing products should be on notice that the FTC takes these violations seriously.”
Under the terms of the stipulated order, the college agreed to refrain from falsely advertising any educational product or service, stop collecting debts on any income-share agreements it holds, re-purchase any previously sold income-share agreements to stop collection on those agreements, request that the consumer reporting agencies delete said debt, and provide written notification to affected consumers.