- The FTC reached a $1.2 million settlement with Caribbean-based Saint James School of Medicine.
- The FTC accused the for-profit of misleading students about its exam pass rates and residency matches.
- Saint James agreed to cancel student debt and refund students from the past five years.
Relief is on the way for medical students harmed by a for-profit school's alleged bad behavior.
Last week, the Federal Trade Commission (FTC) reached a $1.2 million settlement with Saint James School of Medicine, a for-profit medical school that operates in the Caribbean under the parent company Human Resources Development Services. According to the FTC's press release, Saint James was accused of using deceptive marketing by misrepresenting the school's medical license exam pass rate and residency match rate, leaving students worse off.
"Saint James lured students by lying about their chances of success," Samuel Levine, Director of the FTC's Bureau of Consumer Protection, said in a statement. "Today's order requires refunds and debt cancellation for students, while ensuring that their rights under the Holder Rule are honored," Levine added, referring to a rule that preserves consumer rights. "Schools and others who ignore the Holder Rule do so at their peril."
Human Resources Development Services denied any wrongdoing in a statement.
"While we strongly disagree with the FTC's approach to this matter, we did not want a lengthy legal process to distract from our mission of providing a quality medical education at an affordable cost," it said, noting that it still added to its marketing clarifying language for the medical exam pass rates and placement rates.
"We are committed to being an industry leader for transparency and accountability and hope that our efforts will lead to lasting change throughout the for-profit education industry," it added.
According to the settlement terms, Saint James is required to pay $1.2 million, which will go to debt cancellation and refunds for students who attended the school in the past five years and ban the school from making "unsubstantiated claims" regarding exam pass rates or residency matches.
For years, government agencies have been scrutinizing the behavior of for-profit schools, both for undergraduate and graduate educations. For example, the Consumer Financial Protection Bureau (CFPB) in January increased oversight over schools that were handing out private loans to students, potentially harming students if they cannot afford to pay the loans back.
And when it came to major for-profit chains, the Securities and Exchange Commission in 2016 took now-defunct ITT Tech to court over deceiving investors about high default rates on student loans. President Joe Biden's Education Department has taken steps to act on the issue by forgiving student debt for borrowers found to be defrauded by for-profit schools, most recently implementing $415 million in relief for over 16,000 borrowers in that category.