Capella University settles lawsuit over time, cost to earn degree
Minneapolis-based Capella University has resolved a lawsuit that accused the online, for-profit school of misleading students about the time it takes to earn a doctoral degree.
Students who dropped out of its nursing and education programs filed a class-action suit against Capella in 2018. New plaintiffs were named in 2020 after the judge dismissed 42 of the original 45 counts.
The most recent amended complaint, filed in October, alleged Capella lied about its graduation rate and time and cost of earning a doctoral degree, stringing along thousands of students with unnecessary hurdles to graduation.
The programs, Missouri attorney Paul Lesko wrote, “were designed to last considerably longer so Capella could maximize the extraction of tuition payments.”
Because the doctoral programs were mostly online, Lesko alleged, “students were isolated from their peers, unable to see whether others faced the same challenges. Instead, the students would assume it was just them, and continue a fight they could not win.”
The allegations focused on recruiting emails, web chats and phone calls claiming that the “typical” or “average” student completes their program in a certain amount of time, when in reality, Capella knew most of its students never graduate.
Capella argued those marketing claims about time to a degree should not be interpreted as statements about its graduation rates, but two judges disagreed.
“Common sense leads the Court to conclude that a representation that the ‘average’ or ‘typical’ doctoral student completes a program in a certain amount of time is a representation that the ‘average’ or ‘typical’ doctoral student actually graduates from that program. Otherwise, how would she ever complete the program?” U.S. Magistrate Judge Elizabeth Cowen Wright wrote last year in an order affirmed by a district judge.
The civil case was closed this week after the parties resolved it through private mediation. Terms were not disclosed.
“The lawsuit was without merit, and the parties have resolved the matter. Capella University does not publicly discuss litigation matters. Our focus remains supporting our faculty, staff, learners and alumni, as well as providing flexible, professionally aligned online degree programs for working adults,” Capella said in a written statement.
Lesko did not respond to requests for comment.
Capella’s parent company, Strategic Education, Inc., recently disclosed to investors that the U.S. Department of Education began a “fact-finding process” in April 2021 on behalf of more than 1,000 Capella students who wanted their student loans discharged under the government’s “borrower defense to repayment” rule; some of those students had complaints similar to plaintiffs in the lawsuit.
The company also told investors it believed the lawsuit would not “have a material adverse effect on its consolidated financial position.”
The education department declined to comment on the borrower defense investigation Thursday.
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