Wright Career College victims ask Betsy Devos to take action

“Dear Secretary DeVos.”

So begins a five-page letter addressed to the U.S. Education Secretary, signed by Andrew K. Smith, a partner in the Independence law firm Humphrey Farrington & McClain.

The letter and an accompanying legal petition tell the stories of 181 clients who were scammed by the now-closed Wright Career College. We heard versions of the same stories last year in federal bankruptcy court, where Smith eked out small settlements for a group of student plaintiffs as the belly-up company sought to discharge its debts.

Wright, with campuses in Overland Park and four other cities, had promised students first-rate educations from an accredited school. These students thought they would graduate with degrees and certificates that would vault them into exciting, high-paying jobs. 

Instead, they sat through sham courses taught by an ever-changing group of unqualified instructors. Once “graduated,” they learned their credentials were worthless. Employers wouldn’t hire them, and other schools wouldn’t accept their credits. Wright’s proclaimed accreditation status was phony, too — it came from a group created by the career college industry to validate its own unscrupulous practices.

The 264 students in the plaintiff group each received payments averaging about $5,000. That amount is far short of the debt loads averaging nearly $30,000 they took on when they fell for the false promises of Wright’s unscrupulous operators. Many of them forked over an additional $1,000 to Smith’s firm in hopes he could secure them debt relief from the federal government.

Wish them luck. Since joining Donald Trump’s cabinet last year, DeVos has been the profit-seeking college industry’s best friend. She hired industry insiders to “regulate” the schools. And she has rolled back many of President Obama’s attempts to protect students and taxpayers from fraudulent practices.

In his letter, Smith asks the education department to cancel the debts of his plaintiffs in their entirety and reimburse students for the amounts they’ve already paid. He notes that DeVos has announced a process that would provide only partial relief to most claimants.

“This proposal of yours is unacceptable because these petitioners were deceived every step of the way during their time at Wright Career College,” Smith writes. “They were victims of a purposeful scheme that was specifically designed to maximize the school’s receipt of federally guaranteed student loans and grants while neglecting even the most basic duties of an educator.”

While a long shot, the legal petition is important. Besides highlighting the way the profit-seeking school cheated students — a familiar story by now — it details the role of the U.S. Department of Education in allowing the scam to happen. 

Smith notes that federal regulators had ample evidence dating from at least 2013 that Wright was cheating students and taxpayers. Students had filed civil lawsuits. Wright was raking in federal loans and grants for substantial numbers of students who had not completed high school and had no chance of succeeding and paying off their loans. It was charging tuition rates of $30,000 or more for diplomas that would lead only to low-paying jobs.  

Wright’s parent company, Mission Group Kansas, grew rapidly after the 2008 recession, with revenues ballooning from $20 million in 2009 to almost $40 million just three years later. Much of that growth was used to recruit more students, or diverted to shell companies owned by James Miller Jr., the chief executive of Mission Group Kansas. 

Despite those warnings, Smith notes, the Department of Education waited until 2016 to revoke Mission Group Kansas’ eligibility for government financial aid. “By failing to act, the Department fostered Mission Group Kansas’ ability to turn taxpayer-funded financial aid into millions of dollars for its shareholders.”

While giving the sham college and its owners an extended free pass, the Department of Education “continues to pursue Wright Career College students mercilessly for loan repayment,” Smith writes.

His brief also describes how Mission Group Kansas managed in the 1990’s to skirt IRS rules and get incorporated as a non-profit. 

“By getting non-profit incorporation, James Miller was able to free Mission Group Kansas from the regulatory burdens of for-profit colleges, while continuing to reap the personal financial benefits of for-profit ownership,” Smith states.

Clearly, the “career college” scam was profitable for Miller and others. While most of its students survived on incomes of less than $30,000 a year, top executives pulled in salaries of $300,000 or higher.

Although the lawsuit brought by Wright students and regulatory actions by the Obama administration ultimately drove the school into bankruptcy, other unscrupulous operators apparently took notice of its non-profit structure.

“We are seeing increased interest in the idea of for-profit colleges reincorporating as a non-profit tax structure,” says Yan Cao, who studies higher education policy at the Century Foundation. “It’s attractive for reasons that include regulatory avoidance and tax avoidance.”

Also, she says, colleges can use a non-profit status to trick prospective students into thinking they are different from a predatory for-profit school, even if they aren’t.

But whatever their structure, DeVos’s education department seems determined to boost profits for the so-called career college sector. Meanwhile, the Wright Career College students wait on their faint hope for debt relief.