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  • By: Moss Bollinger
  • Published: January 30, 2018
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Laureate Education played hardball when trying to sell off the historic College of Santa Fe, to the point of forcing the college to shut down in the midst of an academic year, students claim in a lawsuit. They also claim Laureate should have acted more honorably, considering it is a public benefit corporation. They’re suing the private college operator for breach of contract bad faith, fraud, negligent misrepresentation, unfair trade, and unjust enrichment.

Laureate operates more than 70 for-profit colleges and universities, as reported by the Courthouse News Service. Its flagship is Walden University, which grew from 2,082 students in 2001 to over 46,000 in 2010. According to the lawsuit, Laureate hoped to do the same for the College of Santa Fe, which it bought in 2009 and renamed the Santa Fe University of Art and Design. Historically, the college has maintained a very limited enrollment.

Far beyond merely having a doomed plan for astronomic growth, the students say, however, Laureate played a truly hard game of hardball when it acquired the college and again when it tried to sell it off. According to the complaint, Laureate withdrew from its initial offer to purchase the college in order to leave the college hanging and drive down the price.

Later on, when it was unable to make the college as profitable as its shareholders demanded, it attempted to sell the college to a Singapore-based for-profit college operator called Raffles Education Corp. That sale was designed to fail, the students allege, so that Laureate could “acquire control of the College’s assets without assuming its responsibilities.”

When the deal failed in April of this year, Laureate shut the college down, leaving students without degrees and faculty without employment. Yet even though it had planned well in advance, Laureate failed to return program fees. Then, when students attempted to take it up on its promise to provide students with $2,500 in transfer credit, they learned it could only be used as “store credit” at other Laureate colleges.

The lawsuit goes on to point out that Laureate has a poor reputation in the industry and is being investigated in several countries — including by the IRS and SEC in the U.S. Even its flagship Walden University leaves students saddled with the second-highest debt load of any American college.

The allegations are wide-ranging and rather shocking, but this is far from the first time a for-profit college operator has been accused of putting its pecuniary interests ahead of the needs of students or even of its own colleges. If you believe you have been scammed by a for-profit college, we encourage you to contact a lawyer right away.

Moss Bollinger LLP - Sherman Oaks, CA

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