<font size="5"><center>
Undercover Investigation Finds Widespread
Deception in Marketing by For-Profit Colleges</font size></center>
The Chronicle
By Kelly Field
Washington
August 1, 2010
A government investigation of 15 for-profit colleges found that student recruiters at four of the colleges encouraged undercover "applicants" to commit fraud and that representatives of all 15 colleges made deceptive, or otherwise questionable, statements to the applicants.
The Government Accountability Office's report on the investigation, which will be made public at a U.S. Senate hearing on Wednesday, describes instances in which recruiters and admissions officers encouraged students to falsify their financial-aid forms and misled them about the colleges' costs, accreditation statuses, and graduation and job-placement rates.
In one instance, an admissions representative encouraged an undercover applicant not to report $250,000 in savings. Another suggested that an applicant claim three dependents when the applicant had none.
Representatives from 13 colleges gave applicants false or misleading information about graduation rates, guaranteed applicants jobs after graduation, or exaggerated their likely earnings. In other cases, representatives reported the annual cost of attendance for only nine months of classes, even after describing the program as year-round.
Six colleges told applicants they could not speak with a financial-aid representative about their eligibility for aid until they had completed an enrollment form and paid an application fee. One representative told an applicant that student loans were not like car loans because "no one will come after you if you don't pay," despite the fact that student loans can't be discharged in bankruptcy.
The report does not identify the 15 institutions by name but does provide some information about them, including whether they are privately held or publicly traded companies, which state they are located in, and whether they are two-year or four-year institutions. In the report, the GAO says it focused on institutions that receive 89 percent or more of their revenue from federal student aid (the allowable maximum is 90 percent) or are located in a state that is among the top 10 recipients of federal student-aid funds.
The report also describes a handful of instances in which admissions and financial-aid officers provided the undercover investigators with accurate and helpful information about the transferability of credits and prospective salaries, among other things.
In addition to the visits, four government investigators filled out online forms expressing interest in for-profit educational programs. After submitting their information, they began receiving calls from recruiters within five minutes. One fictitious student received more than 180 calls in one month, some of them coming as late as 11 p.m.
Wednesday's hearing, being held by the Senate Committee on Health, Education, Labor and Pensions, comes amid increasing government scrutiny of the rapidly growing for-profit sector, which is highly dependent on federal student aid. While for-profits enroll fewer than 10 percent of American college students, they accounted for almost a quarter of federal student aid in 2007-8. At a previous committee hearing, in June, the panel's chairman, Senator Tom Harkin, Democrat of Iowa, said he would offer legislation to crack down on "bad actors" in the sector.
http://chronicle.com/article/Undercover-Probe-Finds/123744/
Undercover Investigation Finds Widespread
Deception in Marketing by For-Profit Colleges</font size></center>
The Chronicle
By Kelly Field
Washington
August 1, 2010
A government investigation of 15 for-profit colleges found that student recruiters at four of the colleges encouraged undercover "applicants" to commit fraud and that representatives of all 15 colleges made deceptive, or otherwise questionable, statements to the applicants.
The Government Accountability Office's report on the investigation, which will be made public at a U.S. Senate hearing on Wednesday, describes instances in which recruiters and admissions officers encouraged students to falsify their financial-aid forms and misled them about the colleges' costs, accreditation statuses, and graduation and job-placement rates.
In one instance, an admissions representative encouraged an undercover applicant not to report $250,000 in savings. Another suggested that an applicant claim three dependents when the applicant had none.
Representatives from 13 colleges gave applicants false or misleading information about graduation rates, guaranteed applicants jobs after graduation, or exaggerated their likely earnings. In other cases, representatives reported the annual cost of attendance for only nine months of classes, even after describing the program as year-round.
Six colleges told applicants they could not speak with a financial-aid representative about their eligibility for aid until they had completed an enrollment form and paid an application fee. One representative told an applicant that student loans were not like car loans because "no one will come after you if you don't pay," despite the fact that student loans can't be discharged in bankruptcy.
The report does not identify the 15 institutions by name but does provide some information about them, including whether they are privately held or publicly traded companies, which state they are located in, and whether they are two-year or four-year institutions. In the report, the GAO says it focused on institutions that receive 89 percent or more of their revenue from federal student aid (the allowable maximum is 90 percent) or are located in a state that is among the top 10 recipients of federal student-aid funds.
The report also describes a handful of instances in which admissions and financial-aid officers provided the undercover investigators with accurate and helpful information about the transferability of credits and prospective salaries, among other things.
In addition to the visits, four government investigators filled out online forms expressing interest in for-profit educational programs. After submitting their information, they began receiving calls from recruiters within five minutes. One fictitious student received more than 180 calls in one month, some of them coming as late as 11 p.m.
Wednesday's hearing, being held by the Senate Committee on Health, Education, Labor and Pensions, comes amid increasing government scrutiny of the rapidly growing for-profit sector, which is highly dependent on federal student aid. While for-profits enroll fewer than 10 percent of American college students, they accounted for almost a quarter of federal student aid in 2007-8. At a previous committee hearing, in June, the panel's chairman, Senator Tom Harkin, Democrat of Iowa, said he would offer legislation to crack down on "bad actors" in the sector.
http://chronicle.com/article/Undercover-Probe-Finds/123744/
