On January 7, 2022, Relman Colfax and co-counsel the National Student Legal Defense Network filed a class action lawsuit in federal court against Walden University (“Walden”), a for-profit university that offers online degree programs. This lawsuit, brought under Title VI of the Civil Rights Act of 1964, the Equal Credit Opportunity Act (“ECOA”) and Minnesota state law, alleges that Walden engaged in “reverse redlining” by intentionally targeting Black and female students for what it falsely represented to be cost- and time-effective online degree programs, but that actually amount to an expensive predatory scheme.
Background: Predatory Lending at For-Profit Universities
The firm represents Aljanal Carroll, Claudia Provost Charles, and Tiffany Fair, who seek to represent a class of similarly situated students whom, they allege, Walden trapped in its Doctor of Business Administration (“DBA”) Program.
As alleged in the complaint, Walden is a for-profit university that offers over twenty online doctoral programs. Walden touts its “intentional inclusivity”: It has conferred more doctorates on Black recipients than any other institution in the nation in the five-year period between 2016–2020, and nearly 80% of its doctoral students are women. These numbers seem laudable at first blush but, as the complaint explains, they are merely a reflection of Walden’s efforts to target its deceptive and predatory practices at Black and female prospective students.
The complaint alleges that Walden deliberately hid the true cost of its DBA program. While advertising a doctoral degree with a specific number of required “capstone” credits, it lured students to the DBA program with the false promise of a swift graduate degree. As alleged in the complaint, Walden inflates the cost of the DBA program by arbitrarily requiring students to complete additional capstone credits. Walden uses this ploy to delay degree completion, thereby increasing DBA students’ tuition costs by tens of thousands of dollars. Worse still, Walden targets Black and female prospective students for its predatory practice. The complaint asserts that Walden targets Black students by advertising in communities with a higher portion of Black residents. The complaint also describes how Walden’s advertising is tailored to appeal to Black, female, and “nontraditional” students (who are disproportionately Black and female).
Plaintiffs allege that, by intentionally marketing its predatory product to Black female students, Walden engages in “reverse redlining” in violation of federal civil rights and fair lending statutes and Minnesota consumer protection law.
Impact: Stopping predatory lending in education
The amount of student loan debt held by American borrowers has increased rapidly over the last several decades. According to the New York Federal Reserve, total student loan debt has increased from $240 billion in 2003 to $1.6 trillion in 2022 and is now the second largest source of consumer debt. The student debt burden is not equally distributed; it falls more heavily on women and students of color.
As for-profit educational institutions have come under increasing fire and face accusations of defrauding their students, the complaint alleges that Walden was responsible for over $800 million in federal student loans in the 2019 academic year alone. Walden’s alleged practice of targeting Black and female students for predatory products has the function and effect of contributing to and exacerbating the stark racial and gender disparities in student debt loads nationwide.
In 2011, Relman Colfax brought the first reverse redlining case against a for-profit university, and, through this case, the firm continues its work fighting against predatory lending practices in the for-profit education space.
The Case Team:
The Relman Colfax litigation team includes Tara Ramchandani, Glenn Schlactus, Alexa Milton, Ted Olds, and Lila Miller, with paralegal support from Joëlle Simeu Juegouo, Alicia Menendez-Brennan, and Don Scales. Relman Colfax is assisted by co-counsel at the National Student Legal Defense Network.
Carroll et al. v. Walden University, LLC et al. No. 1:22-cv-00051-ELH (D. MD)
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- New York Times, 04.08.2022