Former Trump University student recalls aha moment: 'This is a joke’

Listen on Apple Podcasts | Google Podcasts

Trump University promised to teach students the "secrets of success" in the real estate industry before shutting down in 2010 and eventually being ordered to pay a $25 million settlement to students who claimed that they were duped.

For Sherri Simpson, one of the former students involved in the class-action lawsuit and the only objector to the settlement, the experience is a distant but vivid memory.

“I listened to what Trump said, they put him up on video, ‘Oh, you're going to get the best of the best,’” Simpson, a bankruptcy lawyer in Florida, recalled in an interview with Yahoo Finance’s Illegal Tender. “You have the same language he's been using for the last three and a half years [as president]: 'It’s the top of.. the top. It's the best. It's the most beautiful, it’s whatever.’”

Years later, the tale of Trump University (also known as the Trump Entrepreneur Initiative) is instructive to problems arising from purported educational institutions operating primarily for financial gain.

‘This is a joke. There’s nothing there.’

Trump University, designed to help people and train them to become real estate experts, launched in 2005 and began offering free seminars as a way to attract students.

“It was an upscale hotel, I believe in Coral Gables,” recalled Simpson, who attended his program in Florida in 2010. “And they had a big six-foot thing of Trump there, and they had materials they gave you, and they had a lecturer.”

The promise of the program was plausible, given that Trump made millions in the industry after taking over his father’s empire.

“My thought process — which turned out to be totally wrong — but my thought process at the time was here's a guy, big name person,” Simpson said. “Father was a real estate investor, has a lot of money, I knew he had filed bankruptcy, but being in the bankruptcy field, I also knew this was not an abnormal way of handling failed businesses.”

This is the third part of Yahoo Finance’s Illegal Tender podcast series on for-profit colleges. Listen to the episode here.

After being told “about Trump University and how wonderful it is,” Simpson said, attendees were nudged to buy into training programs that cost as much as $35,000. Simpson and a friend signed up for a three-day seminar, called the Apprenticeship Program.

“Immediately I went online, I was very excited to get started, and I went into the course and I started looking around and they had a bunch of videos,” she recalled. “Some of the videos were five years old, many of the videos only related to New York.”

Very quickly, she knew something was off.

“I realized: ‘This is a joke,’” she said. “‘There’s nothing there.’”

The videos were old, they weren’t about investing in Florida, and as she went through more of them, she was surprised at how little use they were to her as a bankruptcy lawyer. And then her mentor for the three days disappeared.

“It was about a year later,” Simpson said. “I think I heard from him. And he said that he never got paid by Trump.”

‘Thank goodness that Trump University was not using federal student loans’

Unlike Fast Train, ITT Tech, and other defunct for-profit schools, Trump University wasn’t an accredited institution. That meant that students couldn’t be put in the position of borrowing thousands of dollars in federal student loans for a phony education certificate or degree, and then struggle to repay.

“Thank goodness that Trump University was not using federal student loans, because many more students would have enrolled,” Bob Shireman, an education expert at the Century Foundation, told Illegal Tender. “And Trump University would have filed a lawsuit to keep getting federal student loans. I mean, it really would have been awful.”

Trump University shut down after multiple investigations, complaints, and three lawsuits: Two class action suits and one civil complaint by the New York Attorney General.

Trump initially defended the school, vowing to not settle. He quickly reversed that position after becoming the president of the United States.

While Trump University is now defunct, its rise and fall serves as another example of how predatory for-profit schools can thrive in America.

The legal discovery process yielded illuminating documents such as Trump University’s 2010 playbook, which mapped out a graph of emotions that potential students or “clients” go through while being pitched.

The playbook also provided instructors with advice on how to convince reluctant students, including those who were concerned about taking on credit card debt to pay for enrollment. (In 2016, an investigation by the Associated Press found that some of the “hand-picked” instructors had some “checkered pasts,” from being convicted of cocaine trafficking to child molestation.)

Editor’s note: This post has been modified to highlight that Sherri Simpson objected to the $25 million settlement and clarify one of her statements on the podcast.

This is the third part of Yahoo Finance’s Illegal Tender podcast series on for-profit colleges. In the next episode, we'll dive into more tactics that many for-profit schools use to recruit students and generate profit.

Listen on Apple Podcasts | Google Podcasts

Aarthi is a reporter for Yahoo Finance covering consumer finance and education. Follow her on Twitter @aarthiswami. If you attended or worked at a for-profit college and would like to share your experience, reach out to her at aarthi@yahoofinance.com

Read more:

• ‘Dollar signs with heartbeats’: How for-profit schools blazed a trail of pain in America

• Some for-profit colleges double dip in both PPP and CARES coronavirus stimulus

• 'They stole my time’: For-profit college students share horror stories

• 'They rigged the system': DeVos sued by California and Massachusetts attorneys general over troubled borrower defense rule

• Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn,YouTube, and reddit.