Morgan v. Richmond School of Health and Technology, Inc.
On June 8, 2011, Relman, Dane & Colfax PLLC filed a class action complaint in the U.S. District Court for the District of Columbia against Richmond School of Health and Technology, Inc. ("RSHT"), which owns and operates a for-profit vocational college on campuses in Chester and Richmond, Virginia. The complaint alleges that RSHT uses deceptive practices to encourage students to take out large federal student loans for an education that it knows is inadequate, and that RSHT targets African Americans and residents of low-income neighborhoods for enrollment. The class alleges violations of the federal Equal Credit Opportunity Act and Virginia Consumer Protection Act, breach of contract, and fraudulent inducement to contract.
RSHT charges $10,000 to $28,000 for its programs, which it claims prepare students to become licensed for positions in the medical field, such as a surgical technician, medical assistant, or massage therapist. Yet the school does not prepare students for certification tests, fails to offer externships to students who need them for licensing, and does not provide basic resources such as training equipment, up-to-date textbooks, or even teachers in its classrooms. RSHT applies for and obtains more than $5 million a year in federal financial aid on behalf of its students to keep the school operating. As a result, students graduate from RSHT saddled with large debts but without improved employment opportunities. Unable to pay back their loans, many RSHT students will be left with impaired credit, making it difficult for them to obtain loans and jobs in the future.
RSHT engages in "reverse redlining" by using various marketing strategies to target African Americans and low-income neighborhoods in the Richmond area. This includes advertising on BET and hip hop radio stations. RSHT's student body is 75% African American even though the area population is only 30% African American. Relman, Dane & Colfax believes this is the first reverse redlining case ever filed against a for-profit college in the country.