Attorney General Bonta Urges FTC to Examine Deceptive Claims by For-Profit Colleges Relating to Student Earning Potential
State of California Department of Justice
May 10, 2022
OAKLAND – California Attorney General Rob Bonta today joined 24 attorneys general in supporting the Federal Trade Commission’s (FTC) efforts to address misleading claims made by certain industries, including for-profit schools about earning potential. State attorneys general have long been at the forefront of efforts to hold predatory for-profit colleges accountable for defrauding its students, investigating and taking enforcement action against schools like Ashford University and Corinthian Colleges for misrepresentations related to post-graduation earning potential. In today’s letter, the attorneys general encourage the FTC to look at the harm these schools can and often do inflict on students, as well as the variety of ways in which for-profit schools misrepresent future earnings, as part of its rulemaking to strengthen its ability to obtain restitution in cases involving misleading earnings claims.
“Many students have seen their higher education dreams turn into a nightmare after enrolling in a predatory for-profit institution,” said Attorney General Bonta. “Lured in by false claims of future earnings, these students leave weighed down by debt and unable to find a job. My office has fought long and hard to get restitution for many of these defrauded student borrowers, and we’re committed to doing all we can to combat this industry-wide practice of deception. I encourage the FTC to look closely at our work on this front as it works to develop new tools to hold predatory actors accountable.
For-profit schools operate to maximize profit for their owners and shareholders, spending a significant portion of their budget on marketing to entice students to enroll. These schools are notoriously expensive, leading many students to take out federal student loans to afford enrollment. The average tuition for certificate programs at a for-profit college, for example, is four-and-a-half times more than that of a comparable program at a community college. For-profit colleges also have significantly lower completion rates than other higher education institutions, leaving many students with tens of thousands of dollars of debt and no degree to show for it. Nearly half of the students enrolling in for-profit colleges are students of color.
Through a variety of state investigations and enforcement actions, state attorneys general have uncovered a wide array of predatory practices by abusive for-profit schools, including misrepresentations relating to the amount, source, and adequacy of future earnings. These misrepresentations include:
Claims about the amount that students might expect to earn upon graduation that are both fundamentally false and fail to take into account the abysmal program completion rates of the school;
Claims that completion of its programs will lead to employment in a specific industry; and
Claims that a student’s future earnings will be sufficient to cover the cost of attending the school.
In the letter, the attorneys general encourage the FTC to specifically take this industry-wide history of deception by for profit schools into account in its rulemaking on misleading earnings claims across industries.