The current owner of both the University of Phoenix and Western International University (WIU) announced today that the schools will end their use of forced arbitration in enrollment agreements. This decision comes as the Department of Education (DOE) is considering some level of restrictions on forced arbitration in upcoming regulations.
While the decision to end the use of forced arbitration in enrollment agreements is commendable, it is only one of many steps that need to be taken by the University of Phoenix in order to restore the legal rights of its students and former students. In a report my colleague Robert Shireman and I coauthored, “How College Enrollment Contracts Limit Students’ Rights,” we found that the University of Phoenix was one of five schools that did not always use mandatory arbitration clauses directly in its enrollment agreements. Instead, Phoenix and WIU included restrictive language in their school catalogs and included a clause in the contract making the contents of the school catalog legally binding. Our assumption is that the announcement means that forced arbitration will be eliminated altogether, but the announcement leaves some room for interpretation.
Another step that should be taken is to remove the existence of other inappropriate restrictive clauses in the enrollment contracts and the catalog. We found that both University of Phoenix and Western International University also included go-it-alone clauses, better known as class action bans. The schools should eliminate those restrictions as well if they want to support their claim of improving the student experience.
Finally, we should be mindful that colleges can change their policies on a whim, which is why federal action is needed. As Stephen Burd from New America reported, the school was previously on the right side of this argument. Its former president said in 2004, students “may not even know the clause is in there, and we don’t want them to feel that we are trying to limit their rights.” Still, since then, the University of Phoenix has enrolled millions of students who may have signed forced arbitration clauses. What comes of these students and former students who unknowingly agreed to private arbitration, which heavily favors the institution? Will the University of Phoenix recognize its deceptive actions and allow any student or former student who signed such an agreement to have their day in court, should they so choose?
Given the change of heart the University of Phoenix has had multiple times in the last fifteen years, it is fair to say that a strong decision from the DOE is more important than ever. Stopping schools from banning group and class complaints is not enough—the DOE must make sure a school which enrolls hundreds of thousands of federally-funded students cannot change its mind about how students can seek justice.