After reading the story about for-profit colleges in the 2/6/2011 issue of the Los Angeles Times, and after reading today's Motley Fool article about the same subject, it was obvious that there are more than "just a few" students who are unhappy with their experience with for-profit colleges and feel like they really got taken. So I found myself wondering how many legal issues COCO was involved in.
I went to their website, clicked on investor and SEC, and read their 2/2/2011 10Q filing with the SEC. Legal Proceedings are discussed on pages 10, 11, 12, and 13. Risk factors are found on pages 26 thru 35.
On page 35 it says: "We and our schools are subject to various lawsuits, investigations and claims, covering a wide range of matters, including, but not limited to, claims involving our current and former students, alleged violations of federal and state laws, false claims made to the federal government and routine employment matters. It is possible that we may be required to pay substantial damages or settlement costs in excess of our insurance coverage or current reserves, which could have a material adverse effect on our financial condition or results of operation. We could also incur substantial legal costs, and management’s attention and resources could be diverted from our business."
It's signed by Mr. Massimino and I have to presume that Mr. Massimino knows what he's talking about.
Let me tell you something. When someone takes out a college loan they agree to pay it back. In fact, you cannot default on a federal govt student loan. It will roll unpaid interest into the priciple. You have to sacrifice all of your spare time and money to make it through college. You have to work harder than the rich folks kids. It is up to the individual to achieve success! Don't come crawling to me with your I was decieved, I thought I could buy a degree crap. I put myself through college and achieved a masters at a highly regarded university through hard work and determination. Now the bleeding heart liberals are trying to let you get away with blaming someone else for your failure to sacrifice. Screw YOU!
It's the same with a private student loan. It can't be normally discharged in bankruptcy. Even thou someone does not complete a degree or take full advantage of their degree, they are still obligated to pay for their education. Funny how many people can run up so much debt and take so many courses before they say that they were misled. When I attended school years ago, I was never given financial advice or job assistance. But then I attended a private non-profit and two state schools. For-profits are a different animal, it seems. They have to worry about your financial obligations and then find you a good paying job. Things sure change over time; people no longer need to take resposibility for themselves. Let the government over protect.
So? All companies have similar disclaimers about legal proceedings. There's always "unhappy" people everywhere. Look at product reviews. You find many with reviews with 1 star to 5 stars. Do they have different products? How can a product be awful for some and best for others? It doesn't help when the media attacks that product; it sways people's perception of worth. It seems that some of these people just want their money back for their own poor decisions and stupidity.
Take for instance what I read this morning about Ms. Croteau who did online classes with Kaplan to become a paralegal. She complains now about her $30,000 debt with no degree (stuck with a loan that she didn't take out? They refused to offer her any more financial aid? Finds out that the program isn't accredited in her home state of New Hampshire?). Hmmm...she must have figured that she was getting educated for free. And all those papers that came to her house about the loan was junk mail. But that's not the entire story.
>>>Kaplan maintains that Croteau's plight is of her own making because of prior debts. "This student incurred a significant part of her debt before she enrolled at Kaplan University, and she reached her federal loan limit," according to a Kaplan University statement. "Although Kaplan cannot forgive loans to the federal government, we have forgiven her financial obligations to Kaplan. As we do with all students, we have tried to work with her to allow her to complete her degree, but she has resisted all of our efforts."<<<
She obviously wants Kaplan to pay off her loan. She's not satisfied with what Kaplan has forgiven and offered her.
Just found out another response from Kapan:
>>>Kaplan paralegal graduates are successfully employed throughout the state of New Hampshire and in other jurisdictions. New Hampshire does not regulate paralegals or accredit paralegal programs. Kaplan University is institutionally accredited by the Higher Learning Commission (HLC) and is a member of the North Central Association of Colleges and Schools (NCA). The HLC is listed as a recognized accrediting agency by the U.S. Department of Education.
Only a portion of the loans this student applied for were related to her education at Kaplan. As a good faith measure, we forgave her financial obligations to Kaplan. However, we are not legally able to forgive the loans she applied for from the federal government, including those loans related to her education at other institutions. All students are given an entrance review in which federal loan status is reviewed. Also, all students have access to their financial aid status via Kaplan’s systems and via the National Student Loan Data System. Since it is the student (not Kaplan) that applies for the loans from the government, the student is responsible for managing their loans and debt.<<<
So is Ms. Croteau stupid, greedy, or something else? She'll probably hook up with a lawyer to sue.