New York City is suing a for-profit college for allegedly causing "wide-ranging consumer harm," after a two-year investigation revealed that Berkeley College routinely violated debt collection laws while intentionally deceiving its students about their financial aid obligations.
The suit, filed in Manhattan Supreme Court on Friday by the Department of Consumer Affairs, accuses Berkeley of "voracious greed," specifically preying on low-income students, many of whom are people of color and first-generation students. In some cases, according to the suit, Berkeley students were informed by recruiters that the school would cover the majority of their tuition, only to later learn that they'd actually signed paperwork taking out tens of thousands of dollars in federal student loans.
The school is also accused of pursuing its graduates for debts that they don't owe—in one case, refusing to issue a diploma to a student who they claimed owed $3,000, despite previously assuring the student that he'd graduated owing nothing.
“For-profit colleges are businesses, and like most businesses, their top priority is generating profits,” Department of Consumer Affairs Commissioner Lorelei Salas said in a statement. “Our investigation into Berkeley College reveals that their recruiters appear to say whatever they think a prospective student wants to hear, especially when it comes to academic programs, employment, transfer credits, and federal student loans—regardless of the truth—to convince them to enroll."
Berkeley is one of the largest for-profit colleges in the region, with 3,500 students enrolled on campuses in Manhattan, Brooklyn, and Westchester, as well as four other locations in New Jersey. According to an Upshot analysis released in 2015, the median annual family income of Berkeley students is $30,100—among the lowest for New York colleges.
The school is accused of taking advantage of this fact by inflating claims about employment and transfer credits, and in some instances going so far as to promise employment after graduation. According to the complaint, an undercover city inspector posing as a prospective student was informed by a recruiter that "96 percent of our students graduate and are employed once they graduate." Berkeley’s actual graduation rate is just 29 percent.
"Berkeley spends a lot of money to target and recruit a population of students comprised mostly of people of color and first-generation college students with limited financial literacy and little familiarity with higher education," the suit determined. "Among other tactics, Berkeley misleads prospective students about employment prospects, trumpets tuition grants that sound substantial but in fact come with hidden strings attached and barely dent Berkeley’s huge tuition mark-up, and lies about the programs offered by other colleges."
The lawsuit comes as Education Secretary Betsy DeVos is successfully rolling back Obama-era regulations aimed at curbing abuse at for-profit colleges. Her agency, which includes several members of the for-profit industry, has also reportedly stopped approving new fraud claims brought by students who attended for-profit schools.
In New York City, at least, there may still be some relief for students who were swindled by the predatory institutions: Those who feel they were ripped off by Berkeley or other for-profit schools are urged to contact the Department of Consumer Affairs or their City Councilmembers.
A spokeswoman Berkeley College denies the allegations, noting that last year the school was "cited by the Income Mobility Report Card for being in the top 1 percent of colleges that help increase income mobility among graduates.”
You can read the full complaint below.