Following on this morning’s post about privately held for-profit school The Keiser School suing Florida State College at Jacksonville, Keiser’s senior counsel, James Waldman, was kind enough to take a few minutes this afternoon to talk with me by phone.
Most interesting to investors following the travails of publicly listed for-profits such as Grand Canyon Education (LOPE) and Apollo Group (APOL), and others, is that Waldman contends the suit is a first of its kind in terms of alleging defamation against for-profit ed, but he also says Keiser has not joined forces with any other for-profits, public or private, in bringing suit. The action is strictly related to what the company sees as a particular smear campaign by Florida State.
Waldman says the company can show that misleading statements by executives of Florida State, featured in the media, harmed the company’s business by reducing enrollment and even getting Keiser barred from recruiting at some high schools.
The issues in the suit, however, go to the heart of the criticisms against for-profit ed.
“Florida State has said that we [Keiser] are ripping off our students, and has said our degree is worthless,” said Waldman.
“There is no evidence that our degree is worthless. It is the same degree that can be obtained at the University of Florida,” contends Waldman. ”
“We have higher graduation rates than the community colleges do, and we create more jobs [for graduates] than they do,” said Waldman.
As for the connection to short sellers, such as Steve Eisman of FrontPoint Financial Services, who are named in the suit as co-conspirators, Waldman says Eisman and others “have been in direct communication with the named defendants,” exchanging information about for-profit ed.
As for Eisman, he also spoke with me this afternoon by phone. Eisman tells me he had never heard of Keiser before hearing of the suit last night. Eisman is not a party to the suit.
“I laughed,” Eisman tells me. “It’s very hard to be a co-conspirator about an institution I’ve never heard of.”
Eisman said he may have had some contact with Florida State’s government liaison, Susan Lehr, who is named as a defendant. However, it was only in the context of a general discussion of for-profit ed. “I speak to a lot of people about this stuff,” says Eisman. “We never spoke about any particular schools, and I’d never heard of Keiser before.”
The suit is ultimately “not at all important to the for-profit eds,” contends Eisman. “What I have said publicly,” adds Eisman, “is that the graduation rates are exceptionally low [in for-profit ed], the default rates are astronomical, and that the federal government should do something to change the industry. Those first two are facts, the latter is my opinion.”
Gainful Employment - Fact and Fiction 
Letter from Steve Wallace to the Editor
Posted: October 8, 2010 in CommentaryTags: community colleges, for profit colleges, Gainful Employment, Keiser Sues, Keiser University, lawsuit, Steven Wallace
A recently filed lawsuit alleges that officials of Florida State College at Jacksonville conspired to compete with a for-profit college with a campus in Jacksonville. This is not true.
With an enrollment of 85,000, our college has plenty of students.
What is true is that Keiser University is retaliating against our efforts to raise awareness about excessive student loan debt.
In collaboration with the U.S. Department of Education, Florida State College at Jacksonville has been significantly involved in efforts to improve student loan consumer protection.
In our view, strong measures are urgently needed at state and federal levels to ensure consumer protection against the abusive practices of some for-profit colleges that can saddle vulnerable students and their families with a lifelong burden of debt without any realistic prospect for repayment.
Such excessive debt often precludes further education and may severely impair the student’s ability to secure future employment and housing. Ultimately, American taxpayers pay for loan defaults, which currently total an estimated $47.4 billion.
Federal studies and investigations have found the for-profit college industry to be at the center of this student debt crisis and have raised serious concerns about some of their business practices.
The leaders of Florida State College at Jacksonville are concerned primarily about the exploitation of students in Northeast Florida by profit-focused colleges as these (typically young) citizens pursue their dream of a higher education.
As one of the largest and most comprehensive public colleges in America, Florida State College at Jacksonville offers nearly every program of interest at tuition rates among the lowest in the nation.
The college’s commitment to student loan minimization led to the establishment of the Star Opportunity Fund – one of the largest local need-based financial aid programs in the country.
The number of scholarships awarded by the fund to low-income students has increased by 176 percent over the past two years, and the college’s foundation has launched a massive campaign to make far more resources available to students.
Florida State College at Jacksonville officials will continue to combat excessive student debt while working hard to protect the interests of our local college students.
We will not let this lawsuit deter us from our mission of providing high-quality, affordable education to our community, nor will it deter us from sounding the alarm about some of the business practices of the for-profit college industry.
STEVEN R. WALLACE,
president,
Florida State College at Jacksonville
From: http://jacksonville.com/opinion/letters-readers/2010-10-08/story/non-profit-collegesconsumers-need-protection?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JacksonvillecomOpinion+%28Jacksonville.com%3A+Opinion%29