Another For Profit school sued. Hopefully shut down soon.

http://studentloansblog.nextstudent.com/2011/07/25/for-profit-college-settles-student-loan-lawsuit-for-1-point-6-million/

For-Profit College Settles Student Loan Lawsuit for $1.6 Million

Posted by Shannon Rasberry on Jul 25, 2011 in Student Loan Scams & Scandals

A campus of for-profit college Kaplan agreed Friday to pay $1.6 million over allegations that the school enrolled students and got them to take out student loans to pay for a vocational training program that the school knew some students would not be able to complete.

The CHI Institute in Broomall, Pa., was the subject of a federal investigation after David Goodstein, the school’s former director of education, filed a whistleblower lawsuit against it in 2007.

The lawsuit alleged that the school misled students and government officials about its surgical-technology training program, which required students complete externships in the field in order to graduate. According to the lawsuit, the school knew that it didn’t have enough externship spots available for students but continued to admit students into the surgical-technology training program.

Students took out expensive student loans to pay for the program, which the school collected as revenue. However, when it was revealed that the required externships were unavailable, some students were unable to complete the program. According to the lawsuit, many of the students who were unable to complete the program subsequently defaulted on their student loans.

Under terms of the settlement agreement, which doesn’t include an admission of wrongdoing, CHI Institute will pay $1.6 million, including $1.13 million to the federal government and almost $500,000 to reimburse borrowers of student loans. As the filer of the whistleblower lawsuit, Goodstein will receive a percentage of the government’s settlement (“Kaplan Campus Settles Allegations For $1.6 Mln,” The Wall Street Journal, July 22, 2011).

CHI Institute, which stopped enrolling students in its surgical-technology training program in early 2008, has been the focus of other investigations, including a review by the U.S. Department of Education.

Enrollment at Kaplan’s colleges has slumped in recent quarters as educators, consumer advocates, and democrats in the U.S. Senate continue to battle for-profit college industry lobbyists and U.S. Senate republicans over rules that tighten access to federal financial aid, including federal grants and federal student loans, at for-profit colleges.

Kaplan announced last week that the chief executive and chief financial officer of Kaplan Higher Education Corporation were resigning. Kaplan said that it’s shifting many of that unit’s services into one institution for its brick-and-mortar campuses and another for its online schools.