MINNEAPOLIS--(BUSINESS WIRE)--The drumbeat of marketing already is in high gear for the for-profit, online-only Capella University, which is seeking to rope in unemployed veterans and others who have lost jobs in the wake of the coronavirus pandemic by signing them up for doctorate degree and other programs. Strategic Education, Inc., the owner of Capella University, has disavowed any profit from federal stimulus dollars targeting for-profit universities, but Capella University is misleading vets and other students about their likelihood of graduating with a degree on time (only about 10 percent) and the fact they very likely will end up with tens of thousands of dollars in extra debt in the process, according to the law firm Peiffer Wolf Carr Kane & Conway (Peiffer Wolf).
The slick, high-profile marketing pushes by Capella University seeking to cash in on the economic downturn brought on by the coronavirus pandemic means that thousands of vets and other unwary students could be corralled by the roughly $100 million a year that Capella spent on advertising during the Great Recession. Capella used 29 percent of its revenues on marketing and locked in a 19.1 percent profit ($64 million) for its owners, far out of line with typical colleges and universities. Who paid the bill? A whopping 81 percent ($338 million) of Capella University’s revenues in 2010 came from federal student loan funds.
Peiffer Wolf filed a federal class action lawsuit in the United States District Court for the District of Minnesota on April 20, 2018, alleging Capella University violated doctoral students’ rights by creating a process intended to ensure that it would be difficult, if not impossible, for students to complete their doctoral programs on time -- or at all. The lawsuit alleges that Capella also made misleading statements that clouded the full and exorbitant cost of their mostly student-loan financed doctoral degree program.
Joseph Peiffer, managing shareholder and attorney, Peiffer Wolf, said: “For Capella and its owners to make a big show out of declining federal stimulus dollars is the height of hypocrisy when they are raking in hundreds of millions of federal student loan dollars every year in a bait-and-switch program that victimizes vets and other students. With false promises and misleading statements, Capella has already ensnared, misled, and ultimately cheated thousands of doctoral students out of their money.
Peiffer added: “What people need to understand is that Capella is not in the business of graduating doctoral students; it’s in the business of taking tuition from doctoral students, knowing 90 percent of them will leave without a degree and buried in student loan debt.”
Louis DeWeaver, a veteran in Michigan, said: “I lost a lot of time and money on the dead-end street of Capella University. I would hate to see other vets who are having a rough time in this coronavirus economy suffer at the hands of Capella.”
Shawn Cooper, a veteran in Texas, said: “And, this is about so much more than the debt. I started at Capella when my daughter was born, so I was incredibly busy with school for those first three years. I'll never get those three years back. I'll never get those moments that I missed with my daughter back.”
In its marketing materials, Capella University has claimed: “Our typical learner will complete their PhD program in 3 years, plus or minus one quarter, by averaging 2 courses per quarter. Their weekly time investment to work at this pace is about 18-24 hours per week.” In reality, students have little control over how long the program takes and can face time-consuming delays.
Capella’s promises of approximately $35,000 and two years and $50,000 and three years to complete a doctoral degree hide the reality of skyrocketing student-loan debt, while the degree programs drag on far beyond Capella’s promised timelines. In the end, most students’ debt would grow so large, they have no choice but to un-enroll so they could dedicate themselves to working to pay back their crushing student loans … and, to add insult to injury, they must do so without degrees to show for their work.
Students that rely on Capella’s misrepresentations and omissions are saddled with crippling debt, bad credit, inability to obtain additional student loans, useless course credits that will not transfer to other institutions, and in the vast majority of cases, no doctoral degree.
Peiffer Wolf also has brought actions on behalf of students at two other for-profit universities, both of which also are online-only institutions engaged in misleading students about how long it will take to graduate and the cost of doing so.
ABOUT PEIFFER WOLF
The law firm Peiffer Wolf Carr Kane & Conway maintains offices in St. Louis, Cleveland, New York, Los Angeles, San Francisco, Austin and New Orleans. Peiffer Wolf is available on the web at https://capellauniversitylawsuit.com/.
EDITOR’S NOTE: A streaming audio recording of the news event will be available as of 6 p.m. ET/5 p.m. CT on April 30th at https://capellauniversitylawsuit.com/.