For-profit colleges accused of misleading students with false information
On August 4th, the U.S. Government Accountability Office (GAO) published a report which unleashed a storm of controversy surrounding recruiters at for-profit colleges. In the study, government investigators posing as students were sent to 15 randomly selected for-profit colleges and reported that they were given misleading and/or false information about program costs, quality and graduation rates.
The colleges were randomly selected according to whether they received 89 percent or more of their total revenue from federal student aid, or whether they were in a state that was listed as one of the top 10 recipients of Title IV funding.
The 15 colleges that were randomly selected are:
1. University of Phoenix (Arizona)
2. Everest College (Arizona)
3. Westech College (California)
4. Kaplan College (California)
5. Potomac College (D.C.)
6. Bennett College (D.C.)
7. Medvance Institute (Florida)
8. Kaplan College (Florida)
9. College of Office Tech (Illinois)
10. Argosy University (Illinois)
11. University of Phoenix (Pennsylvania)
12. Anthem Institute (Pennsylvania)
13. Westwood College (Texas)
14. Everest College (Texas)
15. ATI Career Training (Texas)
The low-down on for-profit colleges
The GAO report defines for-profit colleges as “institutions of post-secondary education” that are either privately owned, or owned by a public traded company.
The report also states that their net earnings tend to “benefit a shareholder or individual.” Approximately 1.8 million students have been lured to for-profit colleges because of their online courses and open admission policies. In 2009, students who were enrolled at these colleges received more than $4 billion in Pell Grants and over $20 billion in federal loans which were provided by the Department of Education.
But apparently the “scale and scope” of these colleges has changed during the past few years; originally they offered certification programs such as cosmetology and business administration, but now the report states that they have “expanded” their programs to bachelor’s, master’s and doctoral level programs as well.
The report also states that students who were enrolled at for-profit colleges are more likely to “default” on their federal student loans than students from other colleges. (The average annual tuition at for-profit colleges in 2009 was approximately $14,000, while the annual tuition at community colleges was around $2,500). Because of this, students who enroll at these colleges tend to have more problems with their credit record which in turn harms their chances of applying for auto loans, mortgages and credit cards.
Undercover applicants uncover “deceptive and questionable marketing practices” at for-profit colleges
Due to Federal statutes and regulations, colleges and universities are required to provide information about their graduation rates if it is requested. However, at 13 out of the 15 randomly selected for-profit colleges, undercover applicants were given false or misleading information about the school’s graduation rates. Also, nine out of the fifteen schools did not provide their graduation rate information either in person or online, and four out of the thirteen colleges did have information on their websites, but the GAO reports that it was quite difficult to find.
One investigator pretending to be an applicant reported that recruiters from three different colleges told him to lie about his savings so he would qualify for financial aid. Another undercover applicant reported that recruiters used “high pressure marketing techniques,” by scolding the applicant after she stated that she wanted to speak to a financial aid representative before enrolling; in another case two representatives grilled the applicant about his “commitment level” for half an hour.
“College representatives exaggerated undercover applicants’ potential salary after graduation and failed to provide clear information about the college’s program duration, costs, or graduation rate,” the report stated. “Admissions staff used other deceptive practices, such as pressuring applicants to sign a contract for enrollment before allowing them to speak to a financial advisor about program cost and financing options.” And just to make your blood boil even more, here is a list of some of the most ridiculous statements told to GAO’s undercover applicants by these for-profit college recruiters:
- Paying $14,495 for a computer-aided drafting certificate was “really low.” (The GAO reports that completing the same certificate at a nearby public college costs approximately $520).
- If you recruit other students to our school you could win an MP3 player or a gift card to a local store.
- Signing an enrollment agreement doesn’t necessarily mean that you are legally binded to the school.
- After graduation, getting a job is a “piece of cake.”
- Community colleges force students to take classes that may not be helpful for their career.
- Student loans are different than car loans because “no one will come after you if you don’t pay it.”
- Paying back student loans “should not be a concern.”