WASHINGTON (CN) – A federal class action accuses the profit-seeking Richmond School of Health and Technology of targeting poor and black students and using their student loans as its “source for cash.” The class calls the school – which got 86 percent of its income from financial aid programs in 2008-2009 – “a sham,” which “exists to make money without any regard for the education its students receive in exchange.”
The allegations echo claims made against scads of profit-seeking colleges across the country. The class claims the Richmond School of Health and Technology (RSHT) almost exclusively enrolls students who get financial aid. It claims the school plays “an extensive role in the financial aid process, including filling out most or all students’ federal financial aid forms and gathering and submitting the students’ necessary paperwork to the United States Department of Education,” and says the school “has cut and pasted students’ signatures from other documents onto financial aid forms that are submitted to the federal government.”
The Richmond school got more than 86 percent of its income from financial aid programs in the 2008-2009 academic year, according to the complaint. But students say the school does not provide the education it promises, and leaves its students saddled with debt.
Named plaintiffs Mary Morgan and Amanda Smith say Richmond targets the poor black people in Richmond through disproportionate marketing, advertising on BET and hip-hop radio stations.
“RSHT’s advertising emphasizes that RSHT is located ‘on the bus line.’ This is a euphemism that RSHT uses intentionally to portray itself as a school for African Americans and to target African American communities that rely disproportionately on Richmond’s public transportation system,” according to the complaint.
The school charges tuition of $10,000 to $20,000 for programs that include massage therapy and surgical technician training.
“Targeting African Americans to take out loans on the basis of deceptive and otherwise unfair practices constitutes ‘reverse redlining.’ Reverse redlining has repeatedly been held to violate federal anti-discrimination laws, including the Equal Credit Opportunity Act,” the students say. (9)
Former students Morgan and Smith say they took out loans for programs that left them unable to get jobs or to earn the salaries they were promised.
Morgan, a black student, says she paid $10,000 to take the school’s community home health program, hoping to become eligible for credentials higher than the certified nurse’s aide license she already had.
“The curriculum that RSHT used for Morgan’s program did not prepare her for any certification examination,” the complaint states. “In addition, among other deficiencies, the school did not even provide proper and sufficient books and laboratory materials for the students to work with, such as hospital beds and patient dummies.”
She says the program was so inadequate that the school paid for her to a take a 6-week certified nurse aide training program at another for-profit school after she graduated. Morgan passed the class and was awarded the credentials that she started out with. The only difference, she says, is that now she’s $10,000 debt.
Smith, a white student, for a $20,000 federal financial aid loan to take the school’s surgical technician training program, but says the school failed to train her to pass the written certification exam or offer her surgical experience through externships.
“At one point, Smith even arranged on her own for an appropriate externship with a surgical center, but RSHT needed to call the center to formalize the externship and refused to do so,” Smith says.
She claims the school’s failure to educate her left without the ability to get a job in her field and a $20,000 debt.
Profit-seeking colleges enroll 12 percent of the country’s higher-education students, according to the complaint. In the 2008-2009 academic year, those students received approximately $24 billion in federal financial aid. In that year, Richmond School of Health and Technology pulled in $5.3 million in financial aid – 86.4 percent of revenue that year, according to the complaint.
“RSHT commits fraudulent and dishonest acts in obtaining federal student loans for its students,” the class claims. “It has cut and pasted students’ signatures from other documents onto financial aid forms that are submitted to the federal government. It has altered W-2 forms to misrepresent information regarding students’ income and instructed employees to destroy the documents from which the signatures were cut.”
The class says the school also leads students to believe they are getting grants when they are actually getting loans.
It also falsifies student attendance records and grades and lies about the employment status of graduates, the class claims.
Morgan and Smith seek punitive damages for the class for violations of the Equal Credit Opportunity Act, the Consumer Protection Act, fraud and breach of contract.
They are represented by John Relman with Relman Dane.