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A college that became part of the migration to Lower Manhattan by institutions of higher learning during the area’s recovery in the years after the terrorist attacks of September 11, 2001 is being sued by the City’s Department of Consumer Affairs (DCA) over allegations of predatory lending practices, among other forms of alleged misconduct.
Berkeley College, a for-profit institution founded in 1931 (and unrelated to the prestigious University of California school with a similar name), opened a campus at 130 William Street, in the Financial District, in 2004. This followed years of explosive growth, during which the College’s enrollment ballooned by nearly 50 percent in a decade. (The College also has locations in Midtown, Brooklyn, White Plains, and four outposts in New Jersey.)
During that era, Lower Manhattan’s growing cachet and its comparatively bargain-priced real estate enticed a virtual hegira of post-secondary institutions — among them King’s College, the College of Nyack, the New York Film Academy, Olivet University, New York University, the Metropolitan College of New York, and Berkeley College — to plant their flags Downtown.
The DCA’s lawsuit alleges that Berkeley College violated New York City consumer protection law and local debt collection rules. In a two-year investigation, the DCA sent undercover agents into Berkley, posing as applicants, and gathered evidence that the school lured prospective students — many of whom are people of color and first-generation college students with low incomes — to one-on-one sales pitches, where they were given misleading presentations about the school’s academic reputation, and deceived about their own possible financial obligations and employment prospects after graduation.
“Our investigation into Berkeley College reveals that their recruiters appear to say whatever they think a prospective student wants to hear,” says DCA commissioner Lorelei Salas, “especially when it comes to academic programs, employment, transfer credits, and federal student loans — regardless of the truth — to convince them to enroll. These aggressive recruiting tactics are designed to prey on the hopes and dreams of consumers seeking improved career prospects and greater financial security to better care for themselves and their families.”
Among other charges, the DCA alleges that Berkeley representatives hoodwinked students into taking out “institutional loans” (meaning loans made directly by Berkeley) that were deceptively referred to as “payment plans.” According to the DCA, Berkeley representatives blocked students from paying tuition in any other way (even refusing to let them pay tuition balances up front), instead steering them into a payment plan.
The investigation also turned up evidence that Berkeley College violated local debt laws when attempting to recoup these loans. These violations appear to have taken several forms, including attempts to collect debts that were not owed, and concealing from students that it was Berkeley representatives who were calling for payment.
The DCA also alleges that Berkeley representatives told an undercover inspector that “96 percent of our students graduate and are employed once they graduate,” when the school’s actual graduation rate is 29 percent.
“Too many students enrolled at for-profit colleges in New York State end up stuck in low-wage jobs and saddled with debt — if they are even able to obtain a degree,” says Jonathan Bowles, executive director of the Center for an Urban Future.
A spokesman for Berkeley College did not respond to a request for comment.
“Predatory schools like Berkeley profit from students’ attempts to better their lives — and leave students saddled with crushing student loan debt,” adds Jane Greengold Stevens, co-director of the Special Litigation Unit at the New York Legal Assistance Group.
Throughout the first decade of this century, for-profit colleges underwent rapid growth and expansion, abetted by the ready availability of government student loan programs and lax oversight from regulators. This growth tapered off around 2009, when scrutiny from federal education officials began to increase, and widespread allegations of misconduct were leveled at the industry.
“The charges against Berkeley College mirror the issues we hear about from attendees of for-profit schools,” said Evan Denerstein, a senior staff attorney at the Mobilization for Justice. “Misrepresentations by for-profit schools about grants and scholarships, graduation and employment rates, and quality of education, all induce students into accumulating crippling amounts of debt for little or nothing in return.”
Two years ago, research by the U.S. Treasury Department and George Washington University concluded that for-profit colleges left many students worse off than they were when they before entering such schools, and that most of these students would have been better off either not attending any college, or else enrolling in a community college, which are non-profit.
Although Berkley College closed its William Street campus in 2013, when the building was sold and demolished to make way for a new luxury apartment tower, the facility may have left a trail of disappointed students in its wake. The DCA is asking any student who believes they may have experienced any wrongdoing by Berkeley to contact the agency by calling 311, or by filing a complaint online at nyc.gov/dca.
Matthew Fenton
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