Berkeley Also Required to Institute New Policies, Entrance Counseling, and Submit to Auditing for Two Years
New York City Mayor Eric Adams today announced an agreement with Berkeley College that will deliver $20 million in debt relief to former students of one of the largest for-profit colleges in New York state. The agreement stems from a 2018 lawsuit filed by the New York City Department of Consumer and Worker Protection (DCWP), which asserted that, to generate revenue, Berkeley engaged in aggressive recruiting tactics designed to prey on the hopes and dreams of consumers seeking improved career prospects and greater financial security.
“Education is key to economic mobility, so the last thing students need is to be deceived by the educational institutions they are trusting to help improve their lives,” said Mayor Eric Adams. “For years, Berkeley College preyed on students just to pad their bottom line. I’m proud of our team at the Department of Consumer and Worker Protection for ‘Getting Stuff Done’ for Berkeley students and delivering them $20 million in debt relief. Our city will remain vigilant against all those who seek to take advantage of New Yorkers simply trying to better care for themselves and their families.”
“From aggressive recruiting tactics to tricking students into debt, Berkeley College engaged in serious deception that harmed working class students hoping to gain an education,” said Deputy Mayor for Economic and Workforce Development Maria Torres-Springer. “Thanks to the steadfast commitment of the Department of Consumer and Worker Protection, Berkeley students are getting some much-needed relief.”
“For-profit colleges are businesses, and, like most businesses, their top priority is generating profits,” said DCWP Commissioner Vilda Vera Mayuga. “But this case sends a strong message to Berkeley and other for-profit schools that New York City will not tolerate practices that prey on the hopes and dreams of New Yorkers and bury them in student loan debt. We look forward to bringing this relief and change in practices to Berkeley’s students.”
This agreement stems from a lawsuit filed by the DCWP in 2018 after it conducted dozens of interviews with current, prospective, and former students; several undercover operations; and review of thousands of pages of documentation from Berkeley.
In its lawsuit, DCWP alleged that Berkeley’s deception included:
- Lying about federal student loans;
- Tricking students into taking out loans directly from Berkeley;
- Deceiving students about institutional grants;
- Falsely disparaging competitors;
- Deceiving students about transfer credits, majors, and careers;
- Concealing costs from students until it is too late for them to withdraw;
- Collecting debt that was not owed;
- Lying on court filings about when debt accrued;
- Concealing its identity from former students when collecting debt;
- Lying to former students about legal judgments; and
- Deceiving former students about re-enrollment.
The settlement — which has been approved by the New York County State Supreme Court —requires Berkeley to:
- Cease collection on any outstanding debt that was incurred before January 1, 2019, which, collectively, Berkeley estimates is valued at $20 million;
- Pay $350,000 to the city, which DCWP plans to use to pay restitution to impacted consumers;
- Produce a random sample of recorded admissions interviews to DCWP on a monthly basis for two years to review for material misstatements; and
- Institute policies related to 1) admissions interviews and financial aid counseling for incoming and enrolled students, 2) notifying students about transfer credits and financial aid issues, 3) communicating with students about debt owed to Berkeley, and 4) making sure statutes of limitation on debt collection are observed.
DCWP will also be referring those receiving restitution to DCWP’s New York City Financial Empowerment Centers, where they can meet one-on-one with financial counselors. Berkeley College is one of the largest for-profit colleges in New York State with approximately 4,000 enrolled students. Those who were students at Berkeley prior to January 1, 2019 and have questions about the terms of this settlement or whether it applies to them should contact DCWP.
Enforcement is one prong of DCWP’s efforts to help New Yorkers struggling with student loan debt, which also include education and advocacy. DCWP has released a series of seven reports about student loans that includes where borrowers live, who is most negatively impacted by student loans, and the impact that student loans have on borrowers’ lives. To help student loan borrowers understand how COVID-19 pandemic relief impacts their loans, DCWP created Important Information for Student Loan Holders: Automatic Payment Suspension and Other Relief During COVID-19. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, federal student loan payments are currently suspended, without interest or penalties, until May 1, 2022. DCWP encourages New York borrowers to visit a New York City Financial Empowerment Center to discuss their options if their financial situation has changed and/or they are unable to afford payments. Counselors can help borrowers enroll in an Income-Driven Repayment (IDR) plan if eligible, which tends to offer payments that are more affordable than the standard repayment plan. To schedule an appointment or to download tips on how to avoid student loan debt distress, borrowers can visit nyc.gov/StudentLoans.
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