Lana Oconnell
Former US President Donald Trump has been criticized for his handling of issues related to colleges and universities. Trump's administration has been accused of political interference in higher education, threatening universities' independence and withholding funding for universities over transgender rights and diversity, equity, and inclusion programs. Trump University, an unaccredited institution, faced lawsuits for misleading students and making false claims. Trump settled the lawsuits for $25 million, without admitting wrongdoing. Trump has also pledged to reform the accreditation system to ensure high-quality education and protect students from exploitative practices.
| Characteristics | Values |
|---|---|
| Year of founding | 2005 |
| Founder | Donald Trump |
| Type of institution | Not a chartered university, no license to offer live instruction or training |
| Focus | Real estate investing |
| Advertising claim | "I can turn anyone into a successful real estate investor, including you." |
| Pricing | $1,495–$35,000 |
| Number of students | 7,000 |
| Outcome | Sued by the State of New York for illegal business practices and false claims; settled for $25 million |
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What You'll Learn
Trump University was not a licensed university
Trump University was a company that offered online education and live, in-person instruction. However, it was not a licensed university and did not have the required credentials to call itself a university.
In 2005, the New York State Department of Education sent a letter to Trump University stating that they were violating state law by using the word "university" when they were not chartered as one and did not have the required license to offer live instruction or training. Despite promising to stop instructing students in New York, the New York Attorney General alleged that Trump University continued to do so.
In March 2010, Deputy Commissioner for Higher Education Joseph Frey sent another letter to Trump, stating that the use of the word "university" was misleading and violated New York Education Law and the Rules of the Board of Regents. As a result, Trump University changed its name to "The Trump Entrepreneur Initiative" in June 2010.
Trump University's seminars and courses were not approved by the Texas Real Estate Commission, and the organization was not an accredited institution. The training materials reviewed indicated that attendees were taught to prey upon homeowners in financial distress and target foreclosure properties.
In 2013, the State of New York filed a $40 million civil suit against Trump University, alleging illegal business practices and false claims. Trump eventually agreed to pay $25 million to settle the class actions and the New York suit, with $21 million going to the participants in the class actions, $3 million to New Yorkers not covered, and a penalty of up to $1 million assessed by the state for running an unlicensed university.
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The free workshops were a sales tactic
Trump University, which was not an accredited institution, used free workshops as a sales tactic to attract students to sign up for its paid seminars and courses. The introductory seminars, typically held in rented spaces such as hotel ballrooms, urged students to enrol in additional classes ranging from $1,495 to $35,000. While the "free workshops" were marketed as providing valuable real estate investing knowledge, they primarily served as a platform to sell the paid programs.
Trump University faced legal issues due to its misleading use of the word "university." In 2005, the New York State Department of Education notified Trump that operating without a license to offer live instruction or training was a violation of state law. Despite promises to cease instructing students in New York, the organisation continued to do so. In 2010, Deputy Commissioner for Higher Education Joseph Frey reiterated that the use of the word "university" by the corporation was misleading and illegal. As a result, Trump University changed its name to "The Trump Entrepreneur Initiative."
The practices of Trump University led to lawsuits and settlements. In 2013, the State of New York filed a $40 million civil suit against Trump University, alleging illegal business practices and false claims. Trump eventually agreed to pay $25 million to settle two class actions and the New York suit, with $21 million going to the class action participants and $3 million to New Yorkers not covered by the class actions. While Trump did not admit any wrongdoing, the settlement aimed to compensate the former students of Trump University.
The training materials reviewed from Trump University's 3-day seminar revealed that attendees were taught unethical practices, such as preying upon homeowners facing financial difficulties and targeting foreclosure properties. Additionally, Trump University falsely claimed that its classes were approved for continuing education credit for Realtors, even though it lacked the necessary accreditation. The consumer protection division sought to recover the money spent by taxpayers on these seminars and penalise the organisation for its misleading practices.
In conclusion, the free workshops offered by Trump University served as a sales tactic to entice students into paying for expensive seminars and courses. The organisation faced legal repercussions for its misleading use of the term "university" and its deceptive business practices. The settlement reached in the lawsuits provided some compensation to affected students, holding Trump University accountable for its actions.
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Students were taught to prey on vulnerable homeowners
Trump University, which was not licensed as a college, used many of the same tactics as predatory colleges. One of the major things that Trump University tried to teach was how to exploit poor, disabled people facing foreclosure. Students were urged to sign up for additional classes, ranging from $1,495 seminars to a $35,000 "Gold Elite" program. About 6,000 of these were for a $1,500 3-day course, and 1,000 were for silver, gold, or elite mentored courses ranging in price from $10,000 to $35,000.
In one such course, real-estate investment advisor Gary Eldred explained that seeking out profitable short sales requires looking for people who are "certified destitute." That means people who are out of work and not likely to be working again anytime soon. The course was called “Real Estate Goldmine: How To Get Rich Investing In Pre-Foreclosure Properties.” The instructor started the class off with: “We’re not peddling get-rich-quick schemes, no blue-sky promises or an easy road to riches… The sad fact is, more and more property owners are getting themselves into trouble! Defaulting on mortgages and losing their homes or commercial properties. I’m sorry for them, but life goes on, and the fact is, one person’s misfortune is someone else’s opportunity."
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The university used deceptive marketing
Trump University, an unaccredited institution, used deceptive marketing to lure students into enrolling in its courses. The university's original business plan focused on online education, but it quickly expanded to include live, in-person instruction. The instruction primarily focused on real estate investing, with Trump claiming in advertisements that he could turn anyone into a successful real estate investor.
Trump University falsely claimed that its classes were approved for continuing education credit for Realtors, even though it was not approved by the Texas Real Estate Commission or any other accrediting body. The university also violated state law by using the word "university" when it was not chartered as one and did not have the required license to offer live instruction or training. Despite promises to stop instructing students in New York, the university continued to operate, leading to a $40 million civil suit filed by the state of New York in 2013.
The deceptive marketing and illegal practices of Trump University led to lawsuits and settlements. In 2016, Trump agreed to pay $25 million to settle two class actions and the New York suit, with $21 million going to the participants in the class actions and $3 million to New Yorkers not covered by the class actions. While Trump did not admit any wrongdoing, the settlement brought some closure to the approximately 7,000 former Trump University students involved in the case.
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Trump settled the lawsuit for $25 million
In 2018, a federal judge in California finalized a $25 million settlement to be paid to attendees of Trump University, a now-defunct real estate seminar. The settlement was reached after several lawsuits alleged that Trump University had defrauded students who paid up to $35,000 to enroll in its programs. The plaintiffs accused the university of false advertising, claiming that the courses taught attendees Donald Trump's secrets to success in real estate.
Trump University agreed to settle the claims for $21 million, plus an additional $4 million for the New York Attorney General's office. The New York Attorney General, Eric T. Schneiderman, had first sued Trump in 2013 for allegedly defrauding thousands of Trump University attendees out of millions of dollars. The settlement marked a stunning reversal by President Trump, who had previously refused to compensate the victims.
The $25 million settlement would recover about 90% of the costs incurred by those who attended Trump University, which did not admit any wrongdoing as part of the settlement. Judge Gonzalo Curiel's decision finalized the settlement, ensuring that victims of the fraudulent university would receive the relief they deserved.
While the settlement provided some measure of justice for the students who felt they did not get their value for money at Trump University, it is important to note that this is not the only instance of controversy surrounding Trump and higher education. Trump has been accused of political interference in higher education, with his administration threatening the independence of universities like Harvard. There have also been concerns about the withholding of funding for universities over issues such as transgender rights and diversity programs. Additionally, Trump has taken steps to reform the accreditation system to prioritize student outcomes, eliminate unlawful discrimination, and promote academic freedom.
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Frequently asked questions
No, Trump University was not a chartered university and did not have the required license to offer live instruction or training. In 2010, it changed its name to "The Trump Entrepreneur Initiative".
Trump University was accused of preying on vulnerable populations and implying that the school offered a fast track to financial security. Students were urged to sign up for additional classes, ranging from $1,495 seminars to a $35,000 "Gold Elite" program. The content of the courses offered little usable content.
Yes, in 2016, Trump agreed to pay $25 million to settle two class actions and the New York suit. $21 million went to the participants in the class actions, $3 million to New Yorkers not covered by the class actions, and a penalty of up to $1 million was assessed by the state of New York for running an unlicensed university.
