This past Sunday the San Francisco Chronicle reported the settlement reached in a class action lawsuit against San Francisco's California Culinary Academy, which is under parent company Career Education Corp. (CEC), According to the Chronicle, 8,500 students who attended the academy from 2003 through 2008 will be eligible for tuition rebates of up to $20,000 each, and CEC will eat, so to speak, $1.8 million in student debt as well, as long as the settlement is approved in the hearing scheduled for August 22.
CEC also owns Le Cordon Bleu, which is facing a similar class action lawsuit in Pasadena. As we originally reported in October, students are alleging fraud against CEC, claiming they were told a culinary degree from Le Cordon Bleu would allow them to become chefs, but that many students who graduate are unable to obtain that position.
We spoke with Michael Lewis Kelly of Kirtland & Packard LLP, the firm representing the LBC students in Pasadena, who said he's satisfied with this settlement as a precedent. "Of course we'd like to do better, but this is a very good result," Kelly says.
Not everyone is as optimistic. The Chronicle writes: "But for many, it's not enough. They say the dream they were sold to be high-paid chefs was bogus. And now they're faced with enormous student loans to pay off - some in excess of $100,000, after deferrals and interest accruals."
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We also checked in via email with Mark Spencer, spokesperson for the CEC, who provided the same statement to us that he did the Chronicle. He claims that while CEC maintains they've done nothing illegal, they've attempted to change their practices in order to improve clarity. He told us: "Since these allegations were made, we have carefully reviewed and modified our policies and practices for reporting job placement rates, admissions and advertising. While we believe our previous practices were legal, we have been very conservative in modifying our policies and procedures to ensure that students understand that we are not promising any specific job outcomes or salaries - something always on our disclosure forms - and that they are responsible for evaluating their local job markets to determine if this is a career path they want to pursue."