Calls for Tougher Oversight of For-Profit Law School

When summer bar exam results were released in September, less than half of students at Jacksonville-based Florida Coastal School of Law had passed.

That was a big jump from the one-in-four bar passage rate for the school last winter. Both times, that passage rate ranked last among all law programs in the state -- a distinction it has held for three of the last four consecutive bar exams. In January, the law school earned another unfortunate distinction as one of two legal programs to fail federal gainful-employment ratings, which signals unmanageable debt-to-earnings ratios among graduates. The law school has filed an appeal of that finding, and also contests the idea that the debt-to-earnings ratio is an appropriate way to evaluate the institution. (This paragraph has been updated to note the law school's appeal and to correct an error on how many times the law school was ranked last in the state in bar passage rates.)

The poor bar exam showings point to how the for-profit law school found itself "seriously out of compliance" with the standards of its accreditor, the American Bar Association, last month. And the high debt load of law students combined with those academic shortcomings has led legal education observers to see a pattern among institutions operated by the law school's parent company, InfiLaw.

The ABA sent a letter to Florida Coastal leaders notifying them the law school had fallen short of the standards after a regular review. Those standards deal specifically with whether a law school's program is rigorous enough for students to pass the bar and succeed in the profession; whether it provides meaningful academic support; and whether it admits too many underqualified applicants unlikely to succeed in the program and pass the bar after graduating.

The admissions standards of law schools have received particular scrutiny in recent years from watchdogs of the sector who say those unprepared for law school are likely to rack up debt without passing the bar exam. And as applications for law school have fallen, it's been harder for many law programs to fill incoming classes with students who earn strong LSAT scores.

Observers say the apparent issues at Florida Coastal are reason for regulators, including the ABA and the Department of Education, to take a more comprehensive look at the law school's parent company, InfiLaw. The company saw one of its law programs, Arizona Summit, placed on probation by the ABA in March over similar issues, and another, Charlotte School of Law, shut down in August after being placed on probation and losing access to Title IV funds last year. And Florida Coastal was one of only two law programs to fail the Department of Education's gainful-employment test in January with a debt-to-discretionary-income ratio of more than 34 percent (the department has since delayed accountability provisions of the gainful-employment rule that would affect an institution's access to Title IV funds).

Although Florida Coastal hasn't been sanctioned like the other InfiLaw programs -- a notice about compliance issues puts a program on alert but precedes steps such as censure, probation or loss of accreditation -- in its October letter the ABA cited the same accreditation standards that Charlotte and Arizona Summit fell short of.

When the ABA placed Charlotte on probation in fall 2016, that prompted the Obama administration to cut off Title IV federal funds, an essential source of funding for legal education programs. The Department of Education argued the school had made "substantial misrepresentations" to students and saddled many with serious loan debt without preparing them for the legal profession. Although the Trump administration signaled that it would consider restoring access to federal aid, the law school's licensing body cited the financial uncertainty in denying an extension of its license to operate in North Carolina. The Obama administration's decision to cut off Title IV funds was highly unusual and indicative of a tougher approach toward for-profits. It also came as Josh Stein, the North Carolina attorney general, conducted an investigation into whether the institution violated state consumer protection laws.

InfiLaw and Florida Coastal didn't respond to requests for comment about whether students or regulators should see some connection between the issues raised in the ABA's letter and the problems that eventually led to Charlotte's demise.

But in an email to students Tuesday that the law school shared with Inside Higher Ed, Florida Coastal Dean Scott DeVito said that multiple misconceptions have arisen about the school in response to the letter. He said the law school was in no danger of closing, and he offered several assertions about the quality and status of the program:

• Compliance issues are not unique to the law school -- at least 23 other programs have received letters about noncompliance issues since 2016.
• Florida Coastal does a good job educating its students, he said, based on the success of its transfer students at other institutions.
• The law school has actually bumped up its bottom-quartile LSAT score -- the metric typically used to evaluate whether a school is admitting too many unprepared students -- over the last two years.

"We trust that regulators will pay attention to these facts, and given the comparison to the schools mentioned above, we do not believe that there is a reasoned basis for closing the school," DeVito wrote.

But critics of for-profit legal education said the issues at Florida Coastal should be considered in the context of poor performance by other InfiLaw programs. Bar passage rates at Arizona Summit fell to 26 percent in July, after it had already been placed on probation.

"I'm shocked at the extent to which the various issues with the InfiLaw schools all appear to be treated separately," said Ben Miller, senior director of postsecondary education at the Center for American Progress.

Miller said the review process that led up to the denial of a license extension for Charlotte found serious cash-flow issues with InfiLaw, its parent company. And he said questions about the company's financial health are connected to concerns about the academic preparation of students.

"These schools are basically 100 percent dependent on tuition. If they're in financial trouble, they're going to need more tuition dollars," he said. "So they need to sacrifice either the quality of the student body and enroll people less equipped to succeed there, or cut expenditures."

Barry Currier, managing director of the ABA's section of legal education and admissions to the bar, said the organization had no basis in its standards to conduct a review of InfiLaw's operations and resources apart from how they impact a particular accredited school.

"Similarly, our law school standards do not provide a basis for us to conduct a review of operations or resources of the universities within which most law schools operate, other than as those operations or resources impact the law school's ability to comply with the standards," he said in an emailed statement. “Consistent with our rules and procedures, we cannot elaborate beyond the letter that we have posted about the ongoing review of Florida Coastal's program.”

An analysis of nearly 100,000 borrower-defense claims -- applications for student loan discharge based on fraud or deception by a college or university -- the Century Foundation released last week found that InfiLaw ranked in the top 10 of for-profit companies for such claims. As of Aug. 15, students of InfiLaw programs had filed 522 borrower-defense claims, with 501 of those claims coming from former students of Charlotte School of Law.

Liz Hill, a spokeswoman for the Department of Education, said 79 former Charlotte students have applied for closed-school discharge, a more straightforward process that allows students enrolled when a school closes its doors to seek discharge of their loans.

The department sought a $6 million letter of credit from Charlotte in talks over restoring Title IV funds, but the school shut down before an agreement could be reached. Hill said the department couldn't comment on whether it would take a closer look at the health of the remaining InfiLaw programs or take measures such as seeking letters of credit

Kyle McEntee, the executive director of Law School Transparency, a nonprofit that advocates for reforms in legal education, said Florida Coastal has taken some measures to come back into compliance. Whether they are enough for the ABA, which has shown an increased interest in financial resources of schools, is an open question, he said.

McEntee said he sees some hope for greater scrutiny of legal programs by their accreditor, the ABA, or by state regulators. But he said had little faith in the Trump administration to take effective action in the case of the remaining InfiLaw programs.

"They have thus far shown themselves to be more concerned with for-profit investors than with students," he said.