The U.S. Department of Education (Department) intends to fine a college more than $29 million for allegedly misrepresenting job placement rates and failing to comply with federal placement rate disclosure requirements.

The fine will be imposed on May 5, 2015, against San Francisco-based Heald College, unless it requests a hearing or submits written material indicating why the fine should not be imposed, according to the Department’s notice to the college’s owner.

As a participant in federal student financial assistance programs authorized under Title IV of the Higher Education Act of 1965 (HEA), the college is required to disclose its job placement rates in accordance with HEA regulations. According to the Department’s notice, Heald violated disclosure requirements by:

  • Omitting essential and material information concerning the college’s methodology for calculating placement rates, including (1) failing to disclose in its web-based placement disclosures that students it deemed to have deferred employment were excluded from the placement rate calculations (a failure deemed “particularly egregious” because the college had disclosed this information in prior placement rate disclosures “and thus clearly understood how to properly describe its methodology”); (2) falsely representing in its web-based disclosures that its placement rates were supported by employer or student attestations; (3) failing in all placement rate disclosures to (i) identify with specificity the cohort of graduates whose results were being reported, (ii) state that the college counted as placed graduates students who had obtained jobs before graduating or entering the college, (iii) disclose that the college had counted students hired for temporary jobs by agencies paid by the college as graduates placed in their field of study, and (iv) counting placements that were clearly out of a student’s field of study as in-field placements.

  • Misrepresenting the job placement rates for its medical assistance program to the body that accredited the program.

The Department also indicated in its notice that because the college’s inaccurate or incomplete placement rate disclosures were misleading or false, they constituted substantial misrepresentations by the college.

Under Title IV HEA regulations, as of October 2, 2012, a fine of up to $35,000 can be assessed for each violation of any provision of Title IV or any implementing regulation or agreement, increased from the prior maximum of $27,500. Based on its finding that the college’s federal Pell Grant, Direct Loan, and campus-based funding levels exceeded median funding levels, the Department determined that the college was not a “small institution.” Concluding that the college’s violations were “severe, and the potential harm to the government and to students is also severe,” the Department intends to fine the college $27,500 for each of 464 placement rates disclosed in documents disseminated by the college prior to October 2, 2012, and $35,000 for each of 482 placement rates disseminated thereafter, totaling $29,630,000. Also assessed against the college is an additional fine of $35,000 for misrepresenting its medical assistant program job placement rates to its program accreditor, for a total fine of $29,665,000.

Ballard Spahr’s Higher Education Group regularly advises educational institutions on compliance with the HEA and other applicable laws. The firm’s Consumer Financial Services Group is nationally recognized for its experience with the full range of federal and state consumer credit laws, its skill in litigation defense and avoidance, and its guidance in structuring and documenting new consumer financial services products.

For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John C. Grugan at 215.864.8226 or gruganj@ballardspahr.com, Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com, or John L. Culhane, Jr. at 215.864.8535 or culhane@ballardspahr.com.


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