United Continental Swipes New General Counsel From Sara Lee

Brett Hart has traded all-he-could eat cheesecake to fly the friendly skies as the top lawyer for the world's largest air carrier.

United Continental Holdings, Inc., announced late Wednesday that it has named Sara Lee Corporation's top lawyer as its new general counsel. Hart's first day on the job will be Dec. 15.

Hart replaces Thomas Sabatino Jr., who announced his plans to parachute out of the position on the same day that the Oct. 1 merger was finalized. Sabatino had been selected to head the merged airlines' legal department, but a spokesperson told CorpCounsel.com at the time that he'd simply opted not to move forward with the company.

Hart will be responsible for managing United Continental's legal affairs across the globe — and will report to CEO Jeff Smisek.

"Brett's experience, leadership skills and legal expertise are great assets to our senior management team," Smisek said in a statement announcing Hart's hire. "He will play a key role as we integrate United and Continental and build the world's leading carrier," he said.

Hart joined Sara Lee in 2003 as assistant general counsel, but he had been in the general counsel role for just over a year. He told Corporate Counsel sibling publication The National Law Journal in an interview earlier this year that he hoped not to leave anytime soon. ChicacoBusiness.com reported that Hart departs Sara Lee in anticipation of a management shake-up following the resignation of CEO Brenda Barnes. Barnes suffered a stroke this year.

A Michigan native, Hart earned his law degree from the University of Chicago in 1994 and joined Sonnenschein Nath & Rosenthal. After a two-year stint as special assistant to the general counsel for the U.S. Treasury, he returned to Sonnenschein and made partner.

Sabatino, 51, previously a lawyer at Deerfield, Ill.-based Baxter International, joined United in March from Schering Plough. That was not long before Chicago-based UAL Corp. chose to merge with Houston-based Continental Airlines.

When he resigned, Sabatino was the second general counsel to leave United in less than a year. Paul Lovejoy resigned in November 2009 "for personal reasons," a company spokesperson said at the time.

Shannon Green can be contacted at sgreen@alm.com.

Also See: United's General Counsel Resigns Just Ahead of Merger (from CC)

Also See: Nothin' But Blue Sky: United Airlines' New Top Lawyer Is Flying High (from CC)

Also See: Top Lawyer 'Ceases' to Ride the Friendly Skies (from CC)

Also See: Sara Lee General Counsel Brett Hart: 'It's Delicious' (from NLJ)

Also See: Click Here for More In-House People News

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Report Touts Drug Courts' Low Cost, High Success in Curbing Recidivism

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Bristol-Myers Squibb and Eli Lilly Win Against Generic Pharma Companies

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Wilmer's New Partners -- Color Them Pink

It's just the start of the season for new partner announcements, but I'm willing to gamble. My bet is that Wilmer Cutler Pickering Hale and Dorr will win the contest for elevating the highest percentage and number of women equity partners in The Am Law 100 for the coming year.

Of the 11 newly promoted partners (their elevation will be effective as of January 2011) at the one-tier partnership firm, eight are women. That means women make up a whopping 73 percent of the new partners. (Currently, the firm has 24 percent women partners, and 9 percent diverse partners.)

 "It wasn't conscious," says Wilmer's co-managing partner William Perlstein (pictured right). "There was no decision to increase the number of women partners." He adds that the firm "really didn't realize what percentage of women would be up. . .we start with a reasonably large number of candidates, and the [partnership selection] committee does a careful review."

Perlstein makes it sound almost routine (maybe that's just in keeping with the decorous ways of an old-line firm), but I keep pressing him to spill the secret behind Wilmer's success with the ladies.

Perlstein insists he's not sure, but he does point out that the firm has a number of part-time partners. (There are 13 partners working part-time: ten women and three men.) In fact, he says, one of the new partners is a part-timer. "Part-time partners have worked well here," he notes, adding that the firm has had a thriving part-time policy since the 1990s.

But Perlstein also insists that the firm's part-time policy is "just part of the piece."

He might be down-playing part-time at Wilmer, because the firm's idea of a reduced schedule doesn't seem that relaxing. "Generally they work 75-80 percent of the full-time schedule," Perlstein says. (Two thousand hours is usually the norm.) "You've got to be available all the time to the client. . . . They work quite hard, but less than full-time."

Jennifer Berrent, one of the new partners, says there's another reason women tend to stay at Wilmer: Culture. A single mother with a 4-year old son, Berrent says even senior partners have their priorities right. "The head of the department told me that there will be conflicts between home and work, and that home should take priority," she says.

Despite the availability of part-time work, Berrent opted to stay full-time. "We have a clear hours expectation here--2,000 hours, and that feels okay to me." More important, she says, is the freedom she has to work from home or on a telecommuting basis. "I don't feel I'm fighting the system here," she says about her irregular schedule. "Unless women craft their own systems, they don't feel empowered."

So Wilmer's secret to success with women boils down to a solid history of part-time work (if billing 1,600 hours fits your idea of a reduced schedule), giving lawyers true flexibility, and that intangible thing call culture. Simple, right?

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Florida chief justice says foreclosure hearings must be open

Reacting to reports of barriers to attending foreclosures hearings, Florida Supreme Court Chief Justice Charles Canady issued a memorandum Wednesday directing all judicial circuit chief judges to ensure public access.

The American Civil Liberties Union, news media groups and other parties complained Monday that judges, bailiffs and other court officers are turning away the public and media with excuses such as foreclosure hearings are only for attorneys.

"The people of Florida are entitled to know what takes place in the courts of this state," Canady said in a response to Sam Morley, general counsel for the Florida Press Association. "No crisis justifies the administrative suspension of the strong legal presumption that state court proceedings are open to the public."

Canady instructed the state’s 20 chief judges to examine current practices and remind judges and court staffers that visitors and callers must be given correct information about attending foreclosure hearings.

ACLU attorney Larry Schwartztol said the directive reflects how seriously Canady takes the state’s commitment to open courts. Canady also reminded judges that the goal of clearing 62 percent of the massive foreclosure backlog with the funds provided during the 2010 legislative session was a goal, not a quota.

"There is no reason why the 62 percent goal should interfere with a judge’s ability to adjudicate each case fairly on its merits," he said.

His comment was an affirmation of the position taken Oct. 28 by John F. Laurent, chair of the state Trial Court Budget Commission. The 62 percent goal was based on funding 62 percent of the original request.

In the grips of a foreclosure rate that has stretched courts over the past two years, critics charge judges have taken shortcuts to expedite cases.

Adolfo Pesquera can be reached at (954) 347-2616.

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Democrats Plan Votes on Controversial Nominees, Senator Says

President Barack Obama's nominees for the federal judiciary have stalled for months in part because of heated disagreement over a handful of nominees. Now, Senate Democrats are looking at forcing votes on four of them.

Sen. Sheldon Whitehouse (D-R.I.) said today that Democrats could move soon to end debate on the nominees. He said that Majority Leader Harry Reid (D-Nev.) was lining up support this morning for what’s known as a cloture petition — the necessary paperwork before holding a vote to end debate.

“He’s lining up the signatures,” Whitehouse said after a meeting of the Senate Judiciary Committee. Such a petition requires 16 signatures.

Whitehouse is a vocal supporter of one of the nominees who have drawn fire: John McConnell Jr., a Motley Rice partner who’s been nominated for federal district court in Rhode Island. The U.S. Chamber of Commerce is opposing McConnell’s nomination, citing his work as a plaintiffs’ lawyer on lead paint litigation and other cases.

The other three nominees whom Reid is trying to force votes on, Whitehouse said, are Goodwin Liu for the U.S. Court of Appeals for the 9th Circuit, Edward Chen for the Northern District of California and Louis Butler for the Western District of Wisconsin. Republicans have targeted all three because of what they call the nominees’ extreme views, while the nominees’ home-state senators and other supporters argue they’re being treated unfairly.

A fifth nominee whom Republicans oppose, Judge Robert Chatigny for the 2nd Circuit, is pending before the Senate Judiciary Committee. A committee vote is planned for Thursday.

Though senators have many other priorities during their “lame duck” session, Whitehouse said he thinks there is time to consider the stalled nominees. Otherwise, he said, “there’d be no point getting the signatures” for the cloture petition.

Senate rules require 60 votes to end debate on a nominee or a bill, unless senators agree to waive a vote entirely. Democrats control 59 Senate seats until January.

On Monday, conservatives sent a letter to Reid asking him not to force votes on any nominees between the midterm elections and the start of the next Congress. “Any ‘lame-duck’ confirmations would be a gross abuse of Congressional authority in a last gasp attempt to perpetuate an agenda that the American people have already rejected,” the letter says.

UPDATE (3:43 p.m.): A group of circuit and district court judges from the 9th Circuit sent a letter this week to Senate leaders asking for quicker action on nominees. The signatories include 9th Circuit Chief Judge Alex Kozinski.

"In order to do our work, and serve the public as Congress expects us to serve it, we need the resources to carry out our mission," the letter (PDF) says. "While there are many areas of serious need, we write today to emphasize our desperate need for judges."

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Bombing Suspect Found Guilty of Just One Conspiracy Count

In a stunning verdict, a federal jury in the Southern District last night acquitted accused embassy bomber Ahmed Khalfan Ghailani on all but one of 285 counts in the twin bombings of U.S. embassies in East Africa in 1998.

Clearing the Tanzanian native of four conspiracies and the murder of 224 people in the near-simultaneous bombings of the embassies in Kenya and Tanzania on Aug. 7, 1998, the jury in Judge Lewis A. Kaplan's courtroom shocked prosecutors and defense lawyers alike with its verdict.

But the prosecution nonetheless succeeded in tying Mr. Ghailani to the bombings. The lone guilty verdict was declared on Count 5, a conspiracy to destroy buildings and property of the United States by means of an explosive. The jury answered a follow-up question in the affirmative, finding that Mr. Ghailani's conduct in Count 5 "directly or proximately caused death to a person other than a co-conspirator."

Mr. Ghailani, 36, faces a mandatory minimum of 20 years in prison and a maximum of life when he is sentenced on Jan. 25.

The diminutive Mr. Ghailani, dressed in a white shirt and tie, had entered the courtroom in handcuffs with his trademark shy smile. Minutes later, he was wiping his hand across his face in relief and hugging and shaking hands with the defense team led by Peter Quijano, Michael Bachrach, Steve Zissou and Anna Sideris.

The prosecution team of Southern District Assistant U.S. Attorneys Michael Farbiarz, Harry Chernoff, Nicholas Lewin and Sean Buckley congratulated the defense team and also took handshakes from U.S. Attorney Preet Bharara.

Mr. Ghailani is the first former Guantánamo detainee to be moved into the civilian justice system and tried on terrorism charges, and his long route to the Southern District and several pretrial rulings may have helped shape the verdict reached yesterday.

Mr. Ghailani allegedly worked with al-Qaida's East African cell that was acting on Osama bin Laden's instructions to kill Americans anywhere in the world. More specifically, prosecutors charged, he bought the truck and the gas tanks used in the Tanzanian explosion.

The day before the bombings, they argued to the jury, Mr. Ghailani fled Kenya on a flight to Karachi, Pakistan. But prosecutors were not allowed to argue to the jury their claim that Mr. Ghailani worked directly for Mr. bin Laden until his capture in 2004.

Once captured, Mr. Ghailani was taken to a secret CIA site and questioned by agents using what the government called "enhanced interrogation techniques" and the defense calls "torture."

Because of the taint on any information derived from Mr. Ghailani during the interrogation, the government vowed not to use his statements against him at trial unless the defense put them in issue.

But the prosecution plowed ahead in its attempt to use one piece of information gleaned from the CIA interrogation—the identity and location of Hussein Abebe, a Tanzanian who claims he sold Mr. Ghailani the explosives used in the bombing in Dar es Salaam.

Prosecutors were dealt a major blow pretrial when Judge Kaplan ruled that Mr. Abebe, their only direct witness who could tie Mr. Ghailani to the bombings, could not testify. Facing a serious delay in a trial they had been teeing up for over a year, the government eschewed an appeal of that ruling and decided to complete jury selection and move on.

The prosecution worked with what it had, and on Monday, it appeared to spectators and the defense, that as many as 11 jurors were ready to vote to convict, as one juror sent a note to the judge saying she had made up her mind and was being attacked for her convictions by her fellow jurors.

Yesterday's result was clearly a surprise to a defense that had argued their client was nothing more than a dupe running errands for a conspiracy he never joined and knew nothing about. Mr. Quijano slumped in his chair as the verdict was about to be read, but he bolted upright when the first "not guilty" was pronounced on the initial conspiracy count—the conspiracy to kill U.S. nationals.

Still the prosecution got their conviction in a trial that has been closely monitored by all sides in the debate over whether accused terrorists should be tried by military commission or in Article III courts.

Judge Kaplan addressed the jury briefly before dismissal, praising them for proving that "American justice can be rendered calmly, deliberately and fairly by ordinary people, people who are not beholden to any government, even this one."

Outside the courthouse, Mr. Quijano lauded the jury for delivering its verdict in the shadow of the World Trade Center. He added that the defense still believes Mr. Ghailani is innocent of all charges, and it plans to appeal.

Four men were convicted in the Southern District in 2001 in the embassy bombing conspiracy and they are serving life sentences.

@|Mark Hamblett can be reached at mhamblett@alm.com.

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Pennsylvania Firms Slow to Adopt iTrends

Apple's iPad tablet computer and "e-readers" like Amazon's Kindle and Barnes and Noble's Nook have gained huge popularity with the tech-hungry public over the past few years, but it appears Pennsylvania law firms are not totally sold on the devices as professional tools.

Almost no one The Legal Intelligencer spoke to said they had considered replacing traditional laptops with the iPad, and most agreed the devices are geared more toward entertainment than anything else.

Likewise, firms have yet to embrace e-readers for work, though several individual attorneys said they own or are considering buying the devices for personal use.

And firms seem equally wary of jumping on cell phone trends.

BlackBerry smartphones may be facing stiff competition from Apple's iPhone and Motorola's Droid in the general consumer market, but they still reign supreme at law firms.

The Legal Intelligencer spoke to a number of firms across the state to find out what type of technology their lawyers rely on and what they're considering. What interviews revealed is that most firms, big and small, seem to have a similar approach to technology and little has changed in recent years.

THE iPAD IS NO SUBSTITUTE

Everyone The Legal Intelligencer spoke to agreed that e-mail access is the number one thing lawyers look for in mobile technology, followed closely by the ability to retrieve documents on the go.

Most said attorneys largely use their phones to check e-mail and their laptops to view, edit, and draft documents.

That said, despite its marketing push as a sleeker, less bulky alternative to the traditional laptop, the general consensus was that the iPad is no substitute and therefore has little application for lawyers in the workplace.

For one, according to Laurence Liss, chief technology officer at Blank Rome in Philadelphia, the iPad's data encryption isn't as strong as that of a laptop, making information stored on it more vulnerable to hackers.

"In our opinion, it's not an enterprise-worthy device from a security point of view or, for that matter, a production point of view," he said. "It's not a replacement for a laptop."

Kevin F. McKeegan, managing partner of Meyer Unkovic & Scott in Pittsburgh, said his firm's technology committee has also been reluctant to support Apple products for security reasons.

He added that he doesn't see much professional use for the iPad anyway.

"I bought my son an iPad when he graduated from college and he loves it, but I'm not sure what I would do with it," he said.

Several people said the iPad is also lacking from a production standpoint because, unlike a laptop, it doesn't have a physical keyboard, which is better suited to typing-intensive applications like Microsoft Word and Excel than a touch-screen is.

"I have one person who has an iPad they bought for themselves and she said it's great for checking e-mail but not user-friendly for editing or preparing documents," said Adelaine F. Williams, chief operating officer at Kaplin Stewart Meloff Reiter & Stein in Blue Bell, Pa.

But not everyone agreed the iPad was inapplicable to the practice of law.

Steven W. Agnoli, chief information officer at K&L Gates in Pittsburgh, said a number of attorneys at his firm have been using the iPad as a supplement to their laptops.

"In our case, it's not a laptop replacement, meaning if you have a lot of work you need to do, [such as] e-mails you need to respond to or draft, you wouldn't use an iPad," he said, but added that what the device does do is give users computing capabilities in situations when they might not otherwise have them.

Agnoli said his firm combats security concerns by having iPad users connect through a network called Citrix, which transfers information over servers without copying data to the devices.

Michael O. Pansini of two-lawyer plaintiffs firm Pansini Mezrow in Philadelphia said his iPad actually has fully supplanted his laptop.

"I've been able to basically duplicate my desktop on my iPad," he said, adding that the device is "great for general research."

Nevertheless, the general consensus among the firms The Legal Intelligencer spoke to was that laptops are still firmly the status quo and that the iPad is less a work tool than a leisure device.

"I haven't seen anyone actually use it as a replacement," Liss said. "But I've seen some people buy them because they think they're cool."

E-READERS

As with the iPad, most of the firms The Legal Intelligencer spoke to said they don't feel there's much professional utility in e-readers like the Kindle, the Nook, and others.

"I don't really see an application for the Kindle," Liss said, calling it "a very limited-functionality device."

But while no one said they use e-readers specifically for business, several lawyers said they own them or are considering purchasing them for their personal reading.

Kaplin Stewart managing partner Maury B. Reiter said he uses the Kindle to read books and newspapers, as did David J. Sorin, co-managing partner of King of Prussia, Pa.-based Sorin Royer Cooper.

"I carry it everywhere I go -- my Kindle and a netbook and my BlackBerry -- and I get most of my reading materials directly on my Kindle, in terms of what I read for professional development and for staying current," he said.

One obvious advantage of an e-reader over the iPad is price.

While the leanest version of the iPad retails for around $500, some models of the Kindle and other devices like it are priced under $150.

Of course, the iPad, which was released three years after the original Kindle, performs a much broader set of functions than eReaders, including web browsing and e-mail.

Still, not everyone has been compelled to make a change.

"I was an early espouser of the Kindle and I don't feel any pressing need to switch," Sorin said.

While neither tablet computers nor e-readers have fully caught on with lawyers as professional tools, it's possible that could change if more firms begin digitizing their law libraries.

Sorin Royer Cooper, for example, already hosts a completely electronic library on a private secure cloud, a move that has "dramatically enhanced cost efficiencies," according to Sorin.

Other firms, like K&L Gates, are considering something similar.

Agnoli said his firm's librarians are looking into going digital, though there are currently no set plans.

If the firm does decide to digitize its library, he said, it will make the materials accessible on its network.

SMARTPHONES

Liss said "the vast majority" of law firms are BlackBerry-oriented, adding that, as with the iPad, many attorneys prefer the BlackBerry's physical keyboard to the iPhone's on-screen touchpads.

Clifford A. Goldstein, CEO of Chartwell Law Offices in Valley Forge, Pa., said he has stuck with the BlackBerry for exactly that reason.

"I considered the iPhone but I found the touchpad to be more difficult to use than the BlackBerry keyboard," he said.

Williams said less than 3 percent of the attorneys at her firm use an Apple device in lieu of a BlackBerry.

"In my personal opinion, BlackBerrys are made for enterprises and iPhones are toys," she said.

But Liss said that, while BlackBerry phones are the standard issue devices at his firm, the firm does allow its attorneys to opt for alternatives like the iPhone and reimburses them a portion of the cost.

Liss admitted this policy can present challenges for the firm's IT department.

"It's a little bit of a headache," he said. "We're not in a position to support every device that comes out on the market, but we'll make a best-effort attempt."

Like Liss, Williams said her firm issues and is mainly set up to accommodate BlackBerrys but will partially reimburse those who prefer to purchase an iPhone, albeit while offering less technical support.

However, in an attempt to avoid straining its IT department, the firm has decided not to offer any compensation or support for other phones like Motorola's Droid, Williams said.

"We feel it's more efficient to have a standardized server," she said.

Similarly, Agnoli said K&L Gates supports BlackBerrys, iPhones, and Windows mobile devices but doesn't deviate from those platforms.

SERVICE PROVIDERS

Many of the law firms The Legal Intelligencer spoke to said which cell phone service providers they do business with is based at least as much on quality as it is on price.

Liss said his firm's largest contract is with T-Mobile, partly because of cost but also because the company has offered consistent international network connectivity and phone reception.

"T-Mobile is, for those of us who travel to Europe and overseas, the best," he said.

But Liss said the firm recently entered into agreements with Verizon and AT&T as well, both of which he said have been improving in price and quality as of late.

Similarly, Williams said her firm contracts with Verizon for its BlackBerrys because it has "the strongest network for our area," which extends to Lancaster and Lehigh counties.

Meanwhile, Agnoli said K&L Gates largely leaves it up to its lawyers to decide which service providers suit their travel habits and geographic location.

That said, the number of options varies greatly with each device.

AT&T, for example, is currently the only service provide available to iPhone users, though media reports are predicting the release of a Verizon iPhone in 2011.

Pansini said now that he owns an iPad he's close to getting rid of his iPhone and exclusively using his BlackBerry for phone calls, citing frequent dropped calls as a major frustration.

So will the technology buying habits for Pennsylvania firms change anytime soon? Based on those interviewed, it would seem that firms will have to be sold on the idea of how new devices and services will improve the productivity of attorneys. And getting that buy-in won't be easy.

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Breyer Says Justices Must Adapt to Facebook World

Don't expect a Facebook friend request from Supreme Court Justice Stephen Breyer any time soon.

The 72-year-old justice said in a speech at Vanderbilt Law School on Tuesday that he was perplexed when he recently saw the film "The Social Network" about the origins of Facebook.

But Breyer said the film illustrates his argument that modern conditions -- like the development of the social networking site -- should inform justices when interpreting a Constitution written in the 18th century.

"If I'm applying the First Amendment, I have to apply it to a world where there's an Internet, and there's Facebook, and there are movies like ... 'The Social Network,' which I couldn't even understand," he said.

Breyer said of the high court: "It's quite clear, we don't have a Facebook page."

Although Breyer was making a point about judicial philosophy, he also touched on the Court's sometimes limited grasp of technological developments. For example, Chief Justice John Roberts in a public employee privacy case before the Court earlier this year tried to figure out the role of a text-messaging service in enabling an exchange between two people.

"I thought, you know, you push a button; it goes right to the other thing," Roberts said. Responded Justice Antonin Scalia: "You mean it doesn't go right to the other thing?"

And in a recent case dealing with a California law regulating the sale or rental of violent video games to children, Justice Anthony Kennedy pressed a skeptical state lawyer on whether the v-chip blocking device, rather than a state law, could be used to keep children away from the games.

"V-chips won't work?" Kennedy asked, before the lawyer politely explained they are limited to television programming.

Breyer was in Nashville to speak to students, teach a class and promote his new book, "Making Our Democracy Work: A Judge's View."

Breyer, who was appointed to the Supreme Court by Democratic President Bill Clinton in 1994, said his views contrast with originalist members like Scalia, whose approach focuses on giving a fair reading to the words of the Constitution as they were meant when they were written.

Scalia and Breyer sparred over their philosophical differences in a joint appearance at the Texas Tech University Law School last week. Scalia, who was appointed in 1986 by Republican President Ronald Reagan, called the writing of the Constitution "providential."

Breyer said he disagrees with those who argue that originalism is "a good system because it will keep the subjective impulses of the judge under control."

"If you want to have history solve everything, let's get nine historians and not nine judges," Breyer said. "And you'll discover that the nine historians are fighting about the various points on which these cases turn anyway."

Associated Press writer Mark Sherman contributed to this report from Washington.

Copyright 2010 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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Albany: Law Allows Reassignment of Life Insurance Benefits, Judges Find

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U.S. Judge Enjoins N.J. Law Allowing State To Swipe Unused Gift Cards

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Victoria Kolakowski

The Recorder

November 17, 2010

In a tightly contested judicial race Victoria Kolakowski celebrated her win as the nation's first openly transgendered judge.

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FDIC sued over financial services company seizure

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Toyota's Nightmare

Toyota executives and lawyers hope they wake up one day in early January and no longer have to worry about Dimitrios Biller. He's the former in-house lawyer who accused the company of discovery fraud. Now they're adversaries in a bitter arbitration with a final hearing scheduled for Nov. 15 (and a ruling expected in early January).

At the heart of their battle are documents that Biller took when he left. Toyota claims they're protected by attorney-client privilege. Biller argues that the crime-fraud exception has rendered them fair game. So far the arbitrator seems to be leaning Biller's way.

READ THE STORY: Toyota's Worst Nightmare: Where Will the Carmaker's Dispute With a Former In-House Lawyer End?

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Latest Chevron Outtake: 'They're All Corrupt!'

Here, Donziger is returning from a confrontation with the judge whom Chevron had asked to inspect a laboratory testing soil samples gathered by plaintiffs. Donziger muses: "The judicial system is so utterly weak. The only way that you can secure a fair trial is if you do things like that. Like go in and confront the judge with media around and fight and yell and scream and make a scene. That would never happen in the United States or in any judicial system that had integrity." A few moments later, Donziger exclaims: "They're all [i.e., the Ecuadorian judges] corrupt! It's — it's their birthright to be corrupt." (The bracketed text is from Judge Kaplan's ruling of November 5.)

"That Chevron is now using videos taken half a decade ago showing plaintiffs' struggle with [the] spectre of corruption as a way of undermining both the plaintiffs and the Ecuadorian judiciary is glaringly ironic," says plaintiffs' spokesperson Karen Hinton, "especially given that it was Chevron who forced the plaintiffs to litigate in Ecuador and Chevron who at the time the videos were taped was the party attempting to corrupt the courts."

A spokesperson for Ecuador's attorney general's office, Carlos De La Guardia of DLG Consulting Group, says that the laboratory incident was never investigated because plaintiffs never filed a complaint. De La Guardia notes that Chevron praised the integrity of Ecuador's judiciary until 2003, and argues that the system was only strengthened by reforms in 2005. "The Republic stands by its independent judiciary," he says, "and will continue to defend it against unfounded attacks." Chevron denies all suggestions that its lawyers bribed judges in the case.

See All of the Videos on the Hub Page: Chevron in Ecuador — the Tapes the Plaintiffs Don't Want You to See

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Judge Orders BofA to Repay $500 Million Seized in 'Calculated Violation' of Bankruptcy Code

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Facing New Student Loan Rules, For-Profit Colleges See Enrollments Fall

Years of record enrollment growth at for-profit colleges may be coming to an end.

New student enrollments have declined at many for-profit institutions, according to earnings reports released over the past few weeks.

When compared to last year’s figures, new student enrollment was down 2 percent at Strayer Education and down 3.9 percent at ITT Education Services. Corinthian Colleges said it expected declines of 5 to 7 percent this year, while DeVry and Capella Education both announced expectations that new enrollment would drop slightly.

The decline in new student enrollments was most severe at the University of Phoenix, the largest for-profit college in the nation. Although the Apollo Group, the University of Phoenix’s parent company, said that new enrollment had fallen 10 percent in the quarter that ended Aug. 31, the company warned that numbers could sink more than 40 percent in the quarter ending Nov. 30 (“As For-Profit Colleges’ Enrollment Growth Slows, Analysts See Signs of an Industry Reset,” The Chronicle of Higher Education, Nov. 11, 2010).

Representatives for many for-profit institutions are linking the slowing enrollment numbers to the marketing and recruiting changes the schools are making in order to comply with new government rules that regulate access to Title IV federal financial aid, which includes federal grants and federal student loans.

One rule, which is already scheduled to go into effect, extends the period after graduation during which student loan defaults are measured by the U.S. Department of Education from two to three years, making it harder for for-profit colleges to demonstrate sustained acceptable student loan default rates that are low enough for the schools to remain eligible for federal financial aid.

Another rule, referred to as the “gainful employment” rule, is a proposed regulation that creates a debt-to-income ratio that ties for-profit colleges’ access to federal financial aid with the ability of students to find employment and successfully make payments on their federal student loans after graduation. For-profit colleges have lobbied heavily against the gainful employment rule, and the Education Department has delayed final language on the rule until early next year.

Student Loan Regulations Spurred by Schools’ Deceptive Practices

The student loan default rules were developed in the wake of heightened federal scrutiny of for-profit colleges, many of which get nearly 90 percent of their revenue from federal grants and federal student loans. Under the government’s so-called “90/10 rule,” at least 10 percent of a for-profit school’s revenue must come from non-federal sources, such as upfront cash tuition payments and private student loans.

Federal inquiries came to a head this summer when an undercover investigation by the Government Accountability Office found widespread deception by recruiters, admissions officers, and financial aid officers at for-profit colleges. There have also been Senate hearings — the third of which is scheduled for December — and state probes into reports of student-recruiting abuses.

For-Profit Colleges Step Up Screening of Students

As a result of the new financial aid rules, for-profit colleges are becoming more selective about the students they enroll.

“Colleges are paying much more attention to the students they bring into their doors because they’re going to be accountable for them,” said Kevin Kinser, who studies for-profit higher education as a senior researcher at the Institute for Global Education Policy Studies at the University at Albany.

Some of the changes made by the larger for-profit schools include offering free orientation periods during which students and colleges can evaluate each other before either party makes a commitment; providing financial-literacy training to deter excessive student loan borrowing; and no longer enrolling “ability to benefit” students who lack a high school diploma or GED but pass a basic skills assessment test to qualify for federal financial aid.

Ability-to-benefit students tend to default on their student loans at twice the rate of other students.

Ariel Sokol, an analyst with UBS Securities, told The Chronicle of Higher Education that the decline in new student enrollments at for-profit colleges throughout the industry is “an appropriate contraction,” considering the confluence of political, regulatory, and financial pressures and the explosive growth in enrollment rates that the for-profit industry has enjoyed the last few years.

The enrollment growth rate at for-profit colleges was 17 percent in 2008 and 28 percent in 2009, compared with a historic growth rate of between 10 and 11 percent, according to Jerry R. Herman, an analyst with Stifel Nicolaus — a surge that Herman sees as “unsustainable growth.”

In the end, Sokol said, the financial and regulatory pressures could “weed out the bad actors that don’t have the appropriate cost structure or the appropriate business model to serve the student population” that they choose to recruit.

Further Reading

Epstein, Jennifer. “Closer Look at ‘Gainful Employment.’ ” Inside Higher Ed. July 26, 2010.

U.S. Department of Education. “Gainful Employment Proposed Rule.” Federal Register, 34 CFR Part 668. July 26, 2010.

U.S. Government Accountability Office. “For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.” Testimony submitted to the U.S. Senate Committee on Health, Education, Labor, and Pensions. August 4, 2010.

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Refinance Student Loans - How and Why?

Let’s face facts. Going to college these days, especially private universities, is no cheap task and can put you well into debt before you even enter the “real world” for yourself. Most people, especially young college students, do not have the tens of thousands of dollars to pony up every year for college tuition either. Therefore, most college students choose to use student loans to put themselves through college, whereby they can pay the tuition without breaking a sweat. However, when it comes time to graduate from college and pay these student loans back, many people do not know where to begin. How about refinancing these loans before you even start anything else?

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Faltering Economy Eroding Consumer Confidence in Student Loans

Some banking industry experts have long regarded the federal student loan program, established in 1965, as one of the most successful public-private partnerships ever created. A historically steady and reliable source of financing for parents and college students needing help paying for school, the federal student loan program also used to be a mostly risk-free and profitable venture for private lenders issuing government-backed student loans.

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NextStudent’s Commitment to Customer Education Seen in Student Loan Blog

The NextStudent Student Loan Blog celebrates its second anniversary this year, and with the recent political changes in Washington continually propelling the student loan industry to the forefront of political debate, its purpose as an excellent watchdog of student loan news and changes in federal student loan policy is more relevant than ever.

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Sale of California Guarantor of Student Loans to Be Nixed by Federal Government

The U.S. Department of Education announces its intent to block California’s planned but unauthorized sale of a multibillion-dollar portfolio of federal student loans, as the state attempts to generate cash in the face of its crippling budget deficit.

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Reported Financial Aid Fraud at For-Profit Colleges Leads to Florida Investigation

Florida’s attorney general has launched a civil investigation into five for-profit higher education companies for alleged deceptive recruiting tactics, misrepresentations made to students about financial aid and accreditation, and other fraudulent and potentially illegal practices (“Florida AG Investigating Five For-Profit Schools,” The Wall Street Journal, Oct. 19, 2010).

The companies and schools under investigation include Kaplan Inc., which is owned by the Washington Post Co.; Education Management Corp. and some of its Argosy schools; Everest College and other institutions owned by Corinthian Colleges; Apollo Group’s University of Phoenix; and the privately held MedVance Institute.

Attorney General Bill McCollum is taking a closer look at these companies as a result of consumer complaints and evidence brought to light in August by an undercover Government Accountability Office probe of 15 for-profit colleges that found all 15 schools guilty of various deceptive and fraudulent practices.

After sending in undercover government agents posing as students, the GAO issued a report revealing that some recruiters at the for-profit schools were recorded encouraging the agents to falsify financial information on the Free Application for Federal Student Aid (FAFSA) in order to qualify for more money in government-issued Pell Grants and student loans, while other recruiters wildly exaggerated the possible earning potential of degrees awarded by the schools.

Many for-profit colleges derive the bulk of their income from federal financial aid funds awarded to students in the form of federal grants and college loans — taxpayer-subsidized money that can account for as much as 90 percent of a school’s total revenue. Apollo Group, in fact, is the single largest recipient of federal student loan funds in the United States.

None of the recruiters targeted in the GAO probe provided clear information about costs and lengths of degree programs or about the schools’ graduation rates, as required by federal regulations.

“We have received a number of complaints. The combination of the complaints and the [GAO] report that came out” prompted the attorney general’s office to begin an investigation, said Ryan Wiggins, deputy communications director for McCollum (“Washington Post’s Kaplan, For-Profit Schools Are Focus of Florida Probe,” Bloomberg, Oct. 19, 2010).

Although Wiggins declined to specify the source of the complaints or answer questions about other details, the attorney general’s website listed the issues being investigated as “alleged misrepresentations regarding financial aid” and “alleged unfair/deceptive practices regarding recruitment, enrollment, accreditation, placement, graduation rates, etc.”

Representatives from Kaplan, Apollo, and Corinthian told The Wall Street Journal that they had not yet been notified of the attorney general’s investigation, while representatives from Education Management and MedVance were reported as being unavailable for comment.

In response to news reports and inquiries, the Apollo Group issued a statement saying that the company supports “efforts to enhance accountability within higher education” and strives “to play a leadership role in continuously improving and transparently reporting the outcomes and achievements of students served by our schools.”

The news of McCollum’s investigation into the for-profit schools comes on the heels of the announcement from Oregon state officials that Oregon has joined a class-action lawsuit against the University of Phoenix, seeking $10 million for investment losses resulting from the school’s alleged securities fraud, deceptive marketing to students, and fraudulent reporting of income from government-backed student loans.

Further Reading

U.S. Government Accountability Office. “For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.” Testimony submitted to the U.S. Senate Committee on Health, Education, Labor, and Pensions. August 4, 2010.

Florida Office of the Attorney General. Civil investigation into Kaplan, Inc. a/k/a Kaplan Educational Centers, Inc., a/k/a Kaplan University, f/k/a Kaplan College. Case number L10-3-1192.

Florida Office of the Attorney General. Civil investigation into University of Phoenix, Inc. Case number L10-3-1193.

Florida Office of the Attorney General. Civil investigation into MedVance Institute, Inc. a/k/a KIMC Investments, LP, Kann Institute for Medical Careers, Inc. Case number L10-3-1194.

Florida Office of the Attorney General. Civil investigation into Everest College a/k/a Florida Metropolitan University a/k/a Everest University and Everest Institute; National School of Technology, Inc.; Florida Metropolitan University. Case number L10-3-1195.

Florida Office of the Attorney General. Civil investigation into Argosy University of Florida, Inc.; Argosy Education Group, Inc. d/b/a Argosy University; Education Management Corp. Case number L10-3-1196.

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College Students Can Receive Private Student Loan Funds from NextStudent Before Fall Semester Begins

With the approaching fall semester, many college-bound students still are in need of essential funds for school. Whether students need funds to cover the full cost of their tuition and expenses or funds to supplement the financial aid they received, NextStudent, the premier education funding company, can help students through its Private Student Loan Program.

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No-Cost Student Loan Consolidation

A no-cost student loan consolidation – doesn’t that just sound too good to be true? Think about it. You have just accrued thousands of dollars in debt through student loans after 4 years of college, or possibly even more. Then, a company offers to take all of your loans off of your hands, put them into one central loan, and do it all for free! Well, while it might not be too good to be true, it all depends around your particular situation, which could make this a “free” process, or could still work out to the benefit of the consolidation company that you are working with throughout the process.

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Recent Graduates Having Trouble Making Their Student Loan Payments Should Consider Looking Into Their Deferment and Forbearance Options

If you graduated in May with federal Stafford student loans, you may be facing the prospect of adjusting your budget to accommodate new monthly student loan payments as your six-month grace periods end sometime this month. If you’re still doing temp work, looking for a job, or if you just got stuck with a lower-than-expected entry-level salary, it’s entirely possible that you’re not sure how you’re going to come up with the money you’re going to need each month to a meet a new monthly expense from student loans going into repayment.

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Using One That Is Online Offers Better Choices Then The Offline Guides

August 4th, 2010

Why should a person use an online student loans guide when they can use one off-line? Doesn’t the off-line option offer more choices then the online option? These are the two questions a lot of people ask when they are considering using a student loans guide online. They believe more information is included when they look off-line. I would say there is a lot of information in those off-line guides, but a lot of this information is usually out of date and cannot be relied upon. If you’re serious about finding information you can put to immediate use then using an updated online student loans guide may be the best option for you. There is not any one option that will have more choices, but there are options that will have better choices. Using a good student loans guide online will definitely carry the latter.

The off-line option usually does not have information that is up to date nor can the information be updated fast enough. Relying on these sources can end up being a waste of time. Do you want to be wasting your time when you are trying to get the financing to go to the school or university of your choice? Of course you don’t, and when you use a good student loans guide online you will always have access to information that is updated and updated quickly. Even if the information itself is not accurate sources will be included to point you in the direction of updated information.

Off-line sources may offer a wide number of resources as well, but they often do not take into account various factors. One such factor would be the proper time line to apply for the loan of your choice or the different requirements for certain students. You may be a non-traditional student so there will be different requirements for you, the off-line guide may not mention this. You may plan on attending some other type of school or university such as a community college or an online college. What are the different requirements if you are planning on taking one of these routes? Knowing the answers to these questions is important, and using outdated sources off-line are not going to offer you any insight.

Using an online student loans guide will have information that is easily researchable as well as easily updatable. You will not have to worry about hunting through thick booklets of information. After all who has the time to search through thick books of information? You also want to be able to categorize and organize information you feel is most valuable to you. Once you have found the information you want you want to easily be able to make reference to it whenever you need to. Are you going to do this if you’re relying upon an oversized guide off-line? Using a student loans guide online will give you access to the information you need in an easily researchable format, as well as a convenient one.

College Student Loans

Entry Filed under: College Student Loans

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Become Your Own College Funding Resource with NextStudent’s Scholarship Search Directory

There is no question that college costs are escalating beyond the ability to pay for even those of modest means without taking out student loans. New proposed student loan legislation is under consideration to lower interest rates but yet has not been enacted. In addition, individual schools from Ivy League universities to community colleges are implementing their own unique policies and programs to help students finance their college education so they avoid further debt.

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NextStudent Inc. to Explore Liquidity Options for Outstanding Auction Rate Notes

NextStudent Inc. announced today that it intends to explore alternatives for creating liquidity for the outstanding auction rate notes issued by NextStudent Master Trust I.

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Students Spring into Funding College for New School Year

Now that spring break is a gently fading blip on college students’ radar, many students are prone to coast through the final weeks of the semester and forget about more serious considerations like planning for next year. High school seniors are in a different boat altogether, diligently working their way through their first Free Application for Federal Student Aid (FAFSA). In their case, it is wise for students and their parents to monitor where they are in the college funding process and plan accordingly, according to NextStudent, the Phoenix-based premier education funding company.

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Prepared Parents Pave the Way for College Success

Many parents dream of the day when their children have attained a well-rounded education, a top-paying job, and are equipped with the character to succeed in the working world. Students spend hours of their lives laboring to achieve their college degree; and parents invest years of hard work to ensure that their children have what it takes to get there.

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Private Student Loans - dispelling the myths

If savings, grants, scholarships, and federal loans don’t cover the cost of your education, it’s time to turn to private loans. But young college students can’t qualify for a private loan, can they? Wrong! This article addresses this and other myths about student loans that you may run into.

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Stafford Loan Consolidation

A Stafford Loan, can help to finance your way through a college or university.

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Pell Grants

While loans are an effective way to pay your way through college, wouldn’t it be nice to have your college education essentially paid for you by the federal government? With a Federal Pell Grant, you can receive the necessary money to attend college without worrying about paying back a loan, because a Pell Grant does not have to be repaid after you finish your college education. Still, it is important to understand that not every college student is eligible for a Federal Pell Grant while they are attending college.

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A NextStudent Guide to Deferment and Forbearance

Sometimes life can put a dent in your budget, making it harder to pay your everyday living expenses and monthly bills. When faced with the loss of a job, going back to school or sudden unexpected expenses like medical bills or car-repair costs, even the most responsible borrowers can find themselves struggling to make their student loan payments.

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Private Education Loans

Sometimes, financial aid, scholarships, and federal grants and loans are just not enough to help you pay your way through college. Also, sometimes a federal loan is just not what you are looking for, as you must abide by the strict regulations surrounding the loans and must follow specific plans to pay back these loans. In these instances, why not apply for a private education loan through a company that specially tailors a loan just for your specific educational purposes?

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Debt From Student Loans Grows as Graduate Unemployment Sets Record

College seniors who graduated in 2009 carried an average of $24,000 in debt from student loans. That figure represents a 6-percent increase over 2008 and continues a four-year trend of rising debt from student loans among college graduates, according to a recent report by The Project on Student Debt.

The report, “Student Debt and the Class of 2009,” analyzes average student loan debt loads for graduates of more than 1,000 public and private nonprofit four-year colleges throughout all 50 states and the District of Columbia. The report comes with a companion interactive map that allows states to be searched for student loan debt information from individual institutions.

Most of the states with high levels of student loan debt were in the Northeast, while most of the low-debt states were in the West. The highest average levels of debt from college loans were held by graduates from colleges in the District of Columbia ($30,033) and New Hampshire ($29,443). The lowest average levels of student loan debt were held by graduates from colleges in Utah ($12,860) and Georgia ($16,568).

Actual state averages of college loan debt loads “are likely higher than these estimates, which are based on data reported voluntarily by public and private nonprofit four-year colleges,” according to the press release announcing the report (“Student Debt Keeps Rising, Unemployment High for Recent Grads,” Oct. 21, 2010).

These state averages also do not include college loan data from private for-profit institutions — which enroll students who generally borrow more money in student loans than students at public and private nonprofit four-year colleges — because very few for-profit schools voluntarily report data on debt from student loans.

More Student Loans, Plus Record Unemployment, Equals Tough Times for Grads

In addition to an overall national increase in average debt from student loans, the report also found that unemployment rates for college graduates ages 20–24 spiked from 5.8 percent in 2008 to 8.7 percent in 2009, marking the highest annual graduate unemployment rate on record and creating more challenges for graduates looking to pay back increasing amounts of student loans.

“The unemployment rate is higher than ever for everyone, including people who didn’t go to college, and obviously that’s a huge concern,” said Sandy Baum, an economics professor who found similar average student loan debt levels in her analysis of student loan data for the College Board (“Average College Debt Rose to $24,000 in 2009,” The New York Times, Oct. 21, 2010).

“With student debt rising and jobs hard to come by, it’s more important than ever to shop around when deciding where to go to college,” said Lauren Asher, president of the Institute for College Access & Success, the research and advocacy group that operates The Project on Student Debt.

Asher said the report shows that students’ debt levels from college loans “vary widely — not only from state to state but also from college to college, even when the sticker prices look the same.”

Asher emphasized that it’s in students’ best interests to exhaust all their scholarship and federal financial aid options, including government-issued grants and low-cost federal student loans, before turning to non-federal private student loans.

“Differences in the kind of debt students graduate with matter,” Asher said. “It’s important to remember that the experts all agree that if you’re going to borrow, you should take out federal loans first, because federal student loans come with far more repayment options and borrower protections than other types of loans.”

Further Reading

The Project on Student Debt. “Student Debt and the Class of 2009.” October 21, 2010.

The Project on Student Debt. “Student Debt and the Class of 2008.” December 1, 2009.

The Project on Student Debt. “Student Debt and the Class of 2007.” October 22, 2008.

The Project on Student Debt. “Student Debt and the Class of 2006.” September 25, 2007.

The Project on Student Debt. “Student Debt and the Class of 2005.” August 29, 2006.

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Federal Stafford Loans from NextStudent Have Great Incentives on Already Low Rates

After exhausting all forms of “free money” for college, such as scholarships and federal grants, the next best thing for students are federal student loans to help them pay for school. Federal Stafford loans have low interest rates and are more appealing when they feature benefits and incentives, according to NextStudent, the Phoenix-based premier education funding company.

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Oregon Sues University of Phoenix for $10 Million for Investor Fraud

Oregon has joined a class-action lawsuit against for-profit college behemoth University of Phoenix, seeking $10 million for losses due to the school’s misrepresentations to investors and other fraudulent practices, Oregon state officials announced on Monday (“Oregon Sues to Recover $10 Million Connected to Misleading Filings by University of Phoenix,” Oregon Department of Justice press release, Oct. 18, 2010).

The state has asked for lead-plaintiff status in the case.

In the lawsuit, originally filed in August in U.S. District Court in Arizona, Apollo Group, the Arizona-based parent company of University of Phoenix, is charged with securities fraud, accused of making misleading financial statements to investors and to the U.S. Securities and Exchange Commission that artificially inflated the company’s stock price and its projected future performance (Gaer et al. v. University of Phoenix class-action complaint, Aug. 13, 2010).

As part of the company’s misrepresentations, the suit alleges, Apollo also masked its damaging practices of deceptive marketing, improper student recruitment, and the encouraged fraudulent use of federal student loans and other government financial aid funds — practices that, when brought to light, caused the company’s stock to plunge and lost investors millions of dollars.

Fraudulent Accounting, Federal Investigations Cost Apollo Investors Millions

Apollo’s activities drew the attention of the SEC, and the resulting SEC investigation, which Apollo disclosed in late October of 2009, brought about the first tumble in the company’s stock price.

The company allegedly misrepresented its income to investors by failing to account for losses associated with student withdrawals from school courses, an accounting practice that came to light in its quarterly earnings filing last October, at the same time that Apollo disclosed it was being investigated by the SEC (“SEC Investigates University of Phoenix Owner, Apollo Group,” Oct. 29, 2009).

As a result of the disclosures, Apollo’s stock price slumped, losing 18 percent of its value in a single day, falling from $73 per share to $60.

Apollo shares remained depressed, Oregon officials say, and continued to erode as the U.S. Department of Education, Congressional panels, and consumer advocacy groups began to push more aggressively for stricter regulations governing for-profit schools and the industry’s use of federal student loans and financial aid money.

By Aug. 2, Apollo stock was trading in the neighborhood of $46.

Then on Aug. 3, news leaked of an undercover investigation into 15 for-profit colleges conducted by the Government Accountability Office, the auditing arm of Congress. The resulting GAO report, which found that the schools were engaged in numerous deceptive and fraudulent practices, caused another slide in Apollo shares. By Aug. 13, when the class-action suit against Apollo was filed in Arizona, the company’s stock price had shrunk to $39.

All told, the drop in Apollo’s shares from $73 to $39 between October 2009 and August 2010 cost the state of Oregon an estimated $10 million from the Oregon Public Employee Retirement Fund, say state officials. The state retirement fund invests in an index fund that includes the Apollo Group.

By joining the class-action lawsuit in Arizona, Oregon officials are charging Apollo with making “materially false and misleading” statements that prevented the state, as an investor, from accurately assessing the risk of its investment in the company.

“As a responsible investor, the Oregon Treasury takes action against companies that violate the public trust and fail to act in shareholders’ best interests,” said State Treasurer Ted Wheeler, in the statement released by the state’s Department of Justice.

Added Oregon’s attorney general, John Kroger, “Companies that cook their books will have to answer to Oregon in court.”

School’s Fraudulent Dealings Included Student Loans

Apollo’s financial practices were also detrimental to Oregon students who were pursuing a degree through the University of Phoenix, the state maintains.

The school improperly cancelled federal college loans for students who had withdrawn from classes, Oregon officials charge, leaving these students with financial obligations to the university instead — an accusation reminiscent of another class-action lawsuit filed against Apollo and the University of Phoenix by three former students in December 2008.

In the 2008 case, the three former University of Phoenix students accused Apollo and the university of improperly denying them the use of federal student loans, in violation of the Higher Education Act (Martin et al. v. Apollo Group and University of Phoenix class-action complaint, Dec. 9, 2008).

The students alleged that, when they dropped courses shortly after enrolling, the University of Phoenix returned all of their federal student loan funds to the lenders without the students’ “knowledge or consent,” even though the students had already incurred tuition charges. The school then demanded immediate repayment from the students for the partial tuition owed.

By charging the students directly and not allowing them to use their federal student loans as payment, the 2008 complaint stated, the University of Phoenix denied these students the borrower protections and more generous loan repayment terms offered by the federal government.

Returning the students’ federal student loan money was also a “transparent attempt” by the University of Phoenix to unlawfully manipulate its federal student loan default rate, the lawsuit charged, since students who don’t finish their education are at the highest risk of defaulting on their student loans. A school can lose access to federal financial aid funds if its student loan default rate exceeds an acceptable level.

But since the school had cancelled the students’ federal loans, if the students failed to pay their tuition charges, they would be defaulting on a debt to the University of Phoenix, not to the government — a default that wouldn’t affect the school’s eligibility for federal funds.

Apollo derives the bulk of its revenue from government-backed college loans and is the largest single recipient of federal student loan funds in the United States.

“With this lawsuit,” said Wheeler, the Oregon treasurer, “we are taking a clear stand that we will not tolerate businesses practices like those used by the University of Phoenix to take advantage of their students and their investors.”

Apollo Responds to Oregon Lawsuit

The Apollo Group responded to the news of Oregon’s charges in a company statement.

“Apollo Group takes its disclosure obligations very seriously and intends to defend this lawsuit vigorously,” said Manny Rivera, a company spokesman.

“Apollo Group is a leader in enhancing the student experience, expanding student protections, and working to help students succeed in completing their degree programs,” he added.

The company operates four University of Phoenix campuses in Oregon, serving about 4,200 students.

The University of Phoenix is the nation’s largest for-profit college, and Apollo, which is also parent company to the for-profit schools Western International University and Axia College, is Arizona's fifth-most valuable company, with a stock-market worth of more than $6 billion.

Further Reading

Gaer et al. v. University of Phoenix. Class-action complaint. Filed August 13, 2010.

Martin et al. v. Apollo Group and University of Phoenix. Class-action complaint. Filed December 9, 2008.

“SEC Investigates University of Phoenix Owner, Apollo Group.” October 29, 2009.

U.S. Government Accountability Office. “For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.” Testimony submitted to the U.S. Senate Committee on Health, Education, Labor, and Pensions. August 4, 2010.

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Consolidate Student Loans before July 1 for Best Rates, Incentives

The road to student loan consolidation is about to take a sharp turn, as interest rates and rules are slated to change on July 1, just about five weeks away. Interest rates on federal student loan consolidation are expected to increase approximately 2 percentage points, making payments much more difficult for student loan borrowers.

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College Savings Plans – are they the best choice for my child?

College savings plans could be the best way to help fund your childs education. Learn more about the College 529 savings plan here.

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Durbin, Miller Introduce Bill to Cut Student Loan Interest Rates

In an effort to cut the interest rates in half on student loans before they increase on July 1 and to provide better access to college, Sen. Richard J. Durbin, D-IL, who also serves as assistant senate Democratic leader, in conjunction with Rep. George Miller, D-CA, senior Democrat on the House Committee on Education and the Workforce, introduced April 13 the Reverse the Raid on Student Aid Act of 2006, or H.R. 5150. Interest rates would be cut for student borrowers and parent borrowers alike.

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Relying On What You Already Know May Cost You More Then You Think

August 3rd, 2010

Are you looking to use a student loans guide to find financing to go to school? If you are then one question you might have is why should you use them when you can simply apply for the types of loans you are already aware of, what would be the point of doing this? Well some of the loans you might already know about have undergone extreme changes since the last you looked into them. If you haven’t noticed, the economy is in a very terrible state right now. There are many financial institutions, which are making it very difficult to obtain financing you could’ve gotten in the past. Even though the student loan market is a large market it does not guarantee that you will get the financing you need. So by using a good loans guide you’ll give yourself access to vital information that will point you in the direction of various options. Various options are what you would need in order to have the best chance for success.

A student loans guide is designed to bring multiple resources to you all in one place. When you are looking for information about student loans you will find information scattered all over the place. How can one hope to be successful when they cannot get properly organized? When you have organized information you’re able to better pick it apart and get to the meat of what you actually can use. The information that you cannot use because it doesn’t apply to you can simply be thrown out. The right type of student loans guide will offer information, which you will be able to make reference to whenever you need it. This is always the type of resource you should look to have at your disposal.

With a student loans guide that is up-to-date you will be able to research other options besides just loans, you’ll be able to find information on grants as well as possible scholarships you may qualify for. As I have already mentioned the more options you have the better. Various scholarships and grants may give you the extra punch you need in order to fund your education without having to get into so much Debt. Being able to properly learn about these other options is just one more weapon you can add to your arsenal.

With a student loans guide you will never be left without the information you need and you will have access to it whenever you have more questions or if you just want to review something you read before applying for it to get a student loan. Being able to make reference to this information will definitely come in handy. You will surely have questions along the way and you will need to refresh your mind at times. When you’re able to do this you will always be prepared for whatever may arise in the future concerning getting student loans. The right type of student loans guide will offer you all of these options, and that is why it is so beneficial for you to use them.

College Student Loans

Entry Filed under: College Student Loans

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NextStudent Announces Winner of ‘Rock My Grad Party’ Contest

Matthew Pierre, a junior at Marcos de Niza High School in Tempe, AZ, won a new laptop computer and $5,000 for his school’s Grad Night Party. NextStudent, a leading Phoenix-based education funding company, launched the Web-based “Rock My Grad Party” contest in April as a way to promote higher education and its Scholarship Search Engine to high schools throughout the Phoenix area.

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Using College Federal Financial Aid Model for Private K–12 Education

At the end of January, in his final State of the Union address, President Bush revealed continuing plans for expanding federal funding of private K–12 schooling with the proposal of a $300 million Pell Grant for Kids program. This program, named after the long-running college Pell Grants program, would provide federal grants to low-income families with children in underperforming schools to help send those children to private, faith-based, or higher performing out-of-district public schools.

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Nextstudent Flies Extra Mile To Ensure Reconsolidation Applications Arrive On Time At Department Of Education

This is the last chance for borrowers to reconsolidate their student loans and receive benefits and incentives before the Department of Education ceases to accept applications, as reconsolidation no longer will be available after March 31.

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NextStudent Offers Low In-School Consolidation Rates Before July 1 Deadline

Student loan borrowers in less than three weeks will come face to face with new legislation changing rules and regulations and increasing interest rates affecting federal student loans. Most notable is that federal student loan interest rates onJuly 1, 2006 will increase 1.84 percentage points, the second-largest interest rate hike in the history of the program.

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N.J. Woman Charged With Scamming $200,000 in Student Loan Fraud

A New Jersey woman was arrested last week for running a student loan scam that allowed her to collect nearly $200,000 in student loans from fraudulent college loan applications she submitted over a period of four years (“U.S. Attorney: Browns Mill ‘Student’ Got $192,000 in Education Loans,” The Trentonian, Aug. 11, 2010).

La’Vada Cruse, 23, has been charged in federal court with mail fraud and aggravated identity theft.

According to the complaint filed with the U.S. District Court in Camden, N.J., Cruse applied for 92 student loans between 2003 and 2007, seeking more than $1 million in student loan funds, even though, according to authorities, she completed only two college courses in three years. Cruse applied for the student loans both in her name and in the names of people whose names, Social Security numbers, and dates of birth she used without their permission.

From those loan applications, Cruse successfully obtained 17 student loans totaling $192,000. The lenders issued the student loan checks directly to Cruse or to a nominee, and Cruse deposited the money into accounts that she controlled.

Student Loan Scam Included Fake Documents and Co-Signers

In the loan applications, authorities charge, Cruse claimed to be a full-time student at any one of six New Jersey–area colleges, and many of the applications were accompanied by a falsified college enrollment letter stating that she was a student at the school.

Federal officials later learned that Cruse completed only six credit hours of classes at Burlington County College in Pemberton, N.J., between 2004 and 2006 (“Burlington County Woman Accused of Obtaining Thousands in Fraudulent Student Loans,” The Philadelphia Inquirer, Aug. 12, 2010).

Cruse’s student loan applications also included a fake co-borrower, with fraudulent biographical, employment, and financial information. Cruse falsified letters of employment and created fake pay stubs and tax forms for the ostensible co-signers in order to submit supporting documentation with her loan applications, authorities said.

U.S. Attorney and IRS Joined Investigation

The Philadelphia Inquirer reports that Cruse came under scrutiny in 2007 after police questioned her in the parking lot of a bank in Medford, N.J., where she was sitting in a silver Mercedes-Benz E320 that contained numerous applications for student loans. In the Mercedes, police also found identification in various names and illegally obtained credit cards, according to an arrest complaint.

Medford police were called to the bank after Cruse reportedly attempted several times to withdraw money from an account that had been frozen on concerns raised by bank employees.

A local investigation grew into a federal probe that involved the U.S. Attorney’s Office, the IRS, and the U.S. Postal Service.

If convicted of the mail fraud charge, Cruse faces a prison sentence of up to 30 years and up to a $1 million fine. The aggravated identity theft charge carries a mandatory minimum sentence of two years.

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Last-Minute Withdrawal by Lenders Leaves Students Scrambling for Student Loans

On July 28, just a few weeks before the fall semester gets underway, some 40,000 college students in Massachusetts suddenly found themselves facing outstanding tuition bills with no money to pay them, when the nonprofit Massachusetts Educational Financing Authority announced that it wouldn’t be able to provide any private student loans for the upcoming semester. MEFA, the largest issuer of student loans to Massachusetts residents, had already suspended its federal student loan program back in April.

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First Lawsuit Filed to Challenge Deficit Reduction Act

Students and concerned citizens may see some recourse after the upset of the passage of the Deficit Reduction Act, S. 1932, that was approved narrowly Dec. 21 by the Senate and then signed into law Feb. 8 by President Bush.

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Financial Aid Options

Before entering college, you may find yourself pondering exactly how you will be able to pay for college. Many public colleges and universities cost thousands of dollars, while private colleges and universities can cost $10,000, $20,000, $30,000, or even more just to attend. Before getting too worried about these high prices, it is important to know that help is just a click of the computer mouse away, as the internet can help you to find the financial aid option that is right for you!

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Knowing How To Find Them Is Key Them In A Certain Way Is Key To Being Successful

August 4th, 2010

How does one go about finding loans for students in a way where it will not end up walking away being confused? This is a very important question you need to ask yourself before looking for loans for students. Many people end up walking away confused because they end up finding information, which is not properly organized. They also end up finding information that is out of date and cannot be relied upon at all. If you are serious about attending a major university or college then you need to make sure you’re able to look for loans for students in an organized and efficient manner. Only when you’re able to do this will you be able to properly take note of which loans you qualify for as well as learning what the eligibility requirements are.

One thing you can do is decide to research various governmental authority sites that offer information on all the various types of loans for students. There are many government authority sites which usually offer information that is up to date as well as accurate. These particular websites will offer links to other websites which will give you more information about any given student loan you’re interested in getting. Typically on the site will you will also be able to find the forms you need to get started with the application process. These types of sites are very important to you if you are looking for information that is organized in a very specific manner.

You can decide to use a good online student loans guide that is up-to-date with all the information you need so you’re able to go about your search in an informed fashion. Sometimes government authority websites may not be enough for you, sometimes you may want more. If you want more then using a good online student loans guide may be just the option you are looking for. These types of guides are usually organized according to the types of loans, the requirements, as well as other options you may not have even considered. You will be able to study the information you need so you’re able to move on with your research in a much more informed fashion.

If neither of these options suits you another option you can use is online forums, which will have questions and answers from other students who are trying to look for student loans. Sometimes getting feedback from other students who are in the same situation as you are is a good option. You will be able to ask questions and get feedback from various people. You’ll also be able to learn about resources and options you may not be able to find anywhere else. Being able to come together in such an environment can have many different benefits. But it is going to be up to you to determine if using an online forum is for you or not.

College Student Loans

Entry Filed under: College Student Loans

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Conyers Joined by 10 Congress Members in Lawsuit to Declare Deficit Reduction Act Unconstitutional

The Deficit Reduction Act of 2005, S. 1932, that was signed into law on Feb. 8 by President Bush continues to come under fire. Another lawsuit to declare that the legislation is unconstitutional was filed April 28 by Rep. John Conyers Jr., D-MI, ranking member on the House Judiciary Committee, who was joined in the suit by 10 Congress members including Rep. George Miller, D-CA, ranking member, House Committee on Education and the Workforce.

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Stafford Loans From NextStudent Provide Graduate Students With up to $20,500 a Year for Graduate Study

Graduate and professional degree students looking for ways to finance their graduate studies could get some of the financial aid they need with Federal Stafford Loans from NextStudent, a leading Phoenix-based education funding company.

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Wells Fargo Empties Customer’s Checking Account to Pay Delinquent Student Loan

An Atlanta couple has found themselves with their savings wiped out after their bank, Wells Fargo, cleared out their checking account in order to pay a piece of what bank officials maintain is an outstanding student loan (“Suddenly, Bank Account Was Gone,” The Atlanta Journal-Constitution, May 1, 2010).

After Hope and Matt Hughes had problems trying to make a purchase with their debit card last month, they discovered that Wells Fargo had cleaned them out, withdrawing $4,059.82 — everything they had — from their checking account. They were also hit with $385 in overdraft fees for debit-card purchases they had made on the day their checking account was emptied.

Wells Fargo appropriated the funds under its right of “setoff,” a prerogative held by most banks that allows a bank to take money from a customer’s savings or checking account in order to pay off any other account — a home mortgage, credit cards, student loans — that the customer holds with the bank that’s overdue.

In the Hugheses’ case, Wells Fargo was collecting money it says it was owed on a $10,000 student loan Hope had taken out with Wachovia Bank, which was acquired by Wells Fargo in 2008.

Your Bank’s License to Help Itself to Your Money: The Right of Setoff

Setoff policies can vary from bank to bank, but in general, banks aren’t required to provide a customer with advance notice that they’re going to take money from a cash account as payment for another account. There are also typically no restrictions, other than the amount that a customer owes on overdue accounts, on how much money a bank can withdraw.

Seizing money through setoff, however, is usually reserved for a last resort, when other attempts at collection have failed, says David Oliver, a senior vice president of marketing and communications with the Georgia Bankers Association.

“We don’t do this without lots of attempts to communicate with our customers and try to work things out,” Jay Lawrence, Atlanta spokesman for Wachovia, told The Atlanta Journal-Constitution. “When this happens, we don’t like to do this. We want our customers to succeed.”

Lawrence declined to comment on the Hugheses’ case except to say that bank records differ from the version of events given by the couple.

Borrower Believed Her Private Student Loan Was in Deferment

Hope Hughes had taken out three student loans on her way to a marketing degree from Kennesaw State University: two government-backed federal college loans and one non-federal private student loan through Campus Partners, a private education loan program offered by Wachovia.

Hope said she thought she had a six-month grace period after she graduated last May before she had to begin paying back her student loans.

“After several rounds of calls and faxes to prove she graduated in May 2009, not December 2008, as the bank believed, and a last-ditch application for a deferment, she thought things were settled,” The Atlanta Journal-Constitution reported.

But in January of this year, Wells Fargo apparently wrote off the Wachovia private loan as a defaulted student loan, sending it to collections. Hope began receiving bills for $11,338.60 — the total student loan amount, plus interest, fees, and penalties.

In early April, after the Hugheses had already encountered the problems with their Wells Fargo debit card, they received a letter notifying them that the bank had exercised its right of setoff and taken the money from their checking account to apply toward Hope’s allegedly defaulted student loan.

The balance of the private loan, nearly $7,300, is still outstanding.

In the meantime, Hope and Matt have had to dip into his 401(k) account, put personal effects up for sale on Craigslist, and negotiate with their other creditors in order not to fall behind on their home and car loans, which are also held by Wells Fargo.

“We are so far behind,” said Hope. “I don’t want anybody else to go through what we’ve been through. … I was blind-sided.”

Bank-Based Private Student Loans Hold Out Convenience … and Vulnerability

As banks have expanded their services from simply being repositories for customer cash to offering everything from home loans and car loans to credit cards, insurance, and student loans, customers have increasingly consolidated their range of financial needs with a single institution. This one-stop banking, or “relationship” banking, has grown over the past 30 years.

To their advantage, customers may be able to qualify for lower interest rates or preferred services when they take out additional loans or lines of credit with a bank where they already have an established relationship.

On the other hand, these customers leave themselves open to their bank being able to seize their cash, should they ever fall behind on one of those loans or lines of credit — a situation in which more and more families are finding themselves as the current recession and high levels of unemployment drag on.

“Our counselors are seeing more and more examples,” said John McCosh, spokesman for the Consumer Credit Counseling Service of Greater Atlanta, a nonprofit financial counseling agency. “When people come to us and we go through their budget and various credit accounts and bank accounts to help them get an overall picture of their finances, … and if we see that there is any vulnerability because someone has a delinquent account at the same place where they have their cash reserves, we will point out that it’s a vulnerability.”

Hope Hughes went to Wachovia for her student loan because she and Matt had banked there for 10 years, taking out their home and car loans there as well.

Wells Fargo “may have had a right legally” to seize the cash from her checking account, Hope said. “Ethically, should they have done it? No. Should they have wiped out my entire bank account? Absolutely not.”

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NextStudent offers students last chance to reconsolidate and save thousands

PHOENIX – March 28, 2006 – NextStudent, http://www.nextstudent.com/, one of the nation’s premier education funding companies offering both consolidation and reconsolidation programs, offers students their last chance to reconsolidate student loans. There only are two days left to reconsolidate, as the option no longer will be available anywhere after March 31. Borrowers now must take advantage to reduce their monthly payments and save thousands before reconsolidation is a thing of the past.

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Students Should Consolidate Loans before July 1 Deadline

There roughly are seven weeks remaining until interest rates on student loans are expected to greatly increase and rules and regulations will change. College and graduate students alike will feel a major pinch unless they now take action to consolidate their student loans.

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NextStudent’s Graduate PLUS Loans Available to Fall Graduate Students

Numerous graduate students who are starting classes this fall now are scrambling for the funds needed for their tuition and other educational expenses at graduate school. With the high cost of graduate school and the fall semester just around the corner, graduate students still have time to get the funds needed to help cover the full cost of their education, according to NextStudent, the Phoenix-based premier education funding company.

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Consolidation of Debt and Student Loans

So you have finally got the degree, but were you surprised with what came along with it? A pile of debt and student loans that need to be paid back starting very shortly after college! Whether it is a Federal PLUS Loan or a loan obtained from your local bank, chances are that a college graduation also brings collection agencies to your mailbox, as everyone wants to be paid back for helping to provide you with a college education. But, while you are writing out all these checks to different loan agencies, have you considered and thought consolidation through yet? Better, yet, do you even know what consolidation is?

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Variety of Student Loan Options Available through NextStudent

As tuition at state colleges increases every year along with the increasing inflation rate, students and their parents often wonder how to pay for the entire cost of college. Oftentimes, federal student loans do not cover the full cost of tuition. However, NextStudent, the Phoenix-based premier education funding company, has a variety of ways to make it possible to receive that college degree.

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Colleges’ Search for New Student Loan Lenders Becomes Top Priority This Fall

As some 17 million students prepare for college in the fall, financial aid offices across the country are scrambling to find new student loan lenders to replace those that are no longer offering federal student loans at their institutions.

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Student Loan Consolidation – How does it Work?

Student loans are a great source of financial aid for students who need help paying for their education. Unfortunately, students often leave college with burdensome debt. In addition, they often have multiple loans from different lenders, meaning they are writing more than one loan repayment check each month. The solution to this problem is loan consolidation.

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