A USC spokesperson said the university was still reviewing the lawsuit, while Maryland-based 2U did not respond to requests for comment.
The lawsuit arrives months after the Rossier School revealed that it had falsified data provided to U.S. News for at least five years — and withdrew from the rankings.
An internal investigation conducted by the law firm Jones Day found that a former dean told administrators to omit information about its less-competitive in-person and online programs out of concern they would drag down the school’s position on the list. Including data on the hundreds of new online doctoral students would cause USC Rossier to “drop like a rock in the rankings,” the former dean said in a 2016 email, according to the Jones Day investigation.
Attorneys for the three students say USC and 2U used the dubious rankings in marketing materials to enroll students in online graduate programs that cost up to $148,000. They claim the profit-sharing agreement USC had with 2U, which receives a share of tuition revenue, incentivized both parties to peddle false claims about the education school.
Iola Favell, one of the three named plaintiffs, said she was drawn to the Rossier School in 2020 because of its standing in U.S. News. She was switching careers from public relations to teaching and thought a prestigious program would give her an edge, Favell said.
“I always wanted to teach but never pursued it because teaching is hard and teachers are underpaid, but I knew it was my calling,” said Favell, 26, who graduated with $100,000 in student debt from the Rossier School’s Master of Arts in Teaching program in December 2021. “I wanted the best education possible and I thought it would be worth the price tag.”
But by the spring of this year, Favell began second-guessing her decision after learning about the rankings scandal.
“I was infuriated,” said Favell, who works as a fourth-grade teacher in the Los Angeles Unified School District. “When I applied, they knew how important the rankings were in my decision and never said a word about the truth.”
Congressional Democrats have raised concerns about whether online program managers, commonly known as OPMs, violate the federal ban on incentive compensation. Many program managers help colleges recruit applicants and receive a share of the tuition revenue from those who enroll — a model that lawmakers say might be skirting the law.
Earlier this month, a group of Democrats wrote Education Secretary Miguel Cardona urging him to conduct a formal legal review of the department’s guidance on whether tuition revenue-sharing arrangements are permissible under the ban. A report the Government Accountability Office released in April said the Education Department lacks adequate oversight of the arrangements online program managers have with colleges.
“A lot of students have long known that they need to steer clear of for-profit schools, but these OPMs like 2U have been really flying under the radar,” said Kristen G. Simplicio, a partner at Tycko & Zavareei who is representing the graduates alongside the National Student Legal Defense Network.
“Regulators are starting to look and say, wait a second, incentive compensation ban is supposed to prohibit schools from providing incentives to recruit people. And it seems like that’s what these OPMs are doing,” she said. “We hope this case is really going to shine a light on what’s been happening out there.”
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