For-profit colleges are one of the biggest and most devastating legal scams in our country today. The hard-hitting marketing schemes appeal to the unemployed and low-income workers who are looking to make more money or to have a better life for themselves.
Unfortunately, many of these students are graduating with crippling debt, or finding that their hard-earned credits won’t transfer to a four-year college. When prospective students ask about repaying student loans, school recruiters assure them that they will find high paying jobs as a result of their studies, therefore they don’t need to worry about financing their education.
The issues with for-profit schools are not limited to undergraduate degrees, however. Even at the graduate and post-graduate/doctoral level there have been claims of misrepresentation, harassment, and intimidation. For-profit schools promise opportunities for “hands-on” training, but because the institutions are accepting so many students into their graduate and post-graduate programs, they are often forcing students to withdraw, transfer or worse, the schools are dismissing students from their program.
The University of Phoenix is perhaps one of the largest and most notorious for-profit institutions with more than 440,000 students. Since up to 90 percent of for-profit school’s revenue comes from federal student loan programs, the government has recently taken an interest in their practices.
The Senate committee, chaired by Sen.Tom Harkin of Iowa, found an average dropout rate of 57 percent within two years of enrollment at 16 unnamed for-profit schools. Students at for-profit schools also account for nearly half of all student loan defaults, the committee found. Sen. Harkin’s committee found that for-profits tend to charge more for tuition than comparable public schools and spend a large share of revenues on expenses unrelated to teaching.
Unlike other higher education institutions, where admission is competitive, research found that admissions requirements at for-profit schools are minimal and in some cases non-existent. In fact, some of the representatives get paid commission based on the number of students they enroll. The fact is, all of them are profit-drive businesses first and higher education institutes second.
The larger schools include:
- Argosy University,
- Art Institute,
- Brown Mackie College
- University of Phoenix,
- The Art Institutes,
- Capella University,
- Everest University,
- Everest College,
- Kaplan College,
- Kaplan University,
- Schiller International University
- South University
In August 2011, the US Department of Justice and four states including, California, Indiana, Florida and Illinois filed a multi-billion dollar fraud lawsuit against Education Management Corporation. The lawsuit is based in part on The False Claims Act, which is designed to prevent companies from enrolling students for their aid money. The 122-page complaint states that Education Management got $2.2 billion of federal financial aid in fiscal 2010, making up for 89.3 percent of its net revenues.
The Apollo Group, which operates the University of Phoenix, the largest for-profit college, got $1.2 billion in Pell grants in 2010-11, up from $24 million a decade earlier. Apollo got $210 million more in benefits under the Post-9/11 G.I. Bill.
Still, more than two-thirds of Apollo’s associate-degree students leave before earning their degree. While students at for-profit colleges make up 13 percent of the nation’s college enrollment, they account for roughly 47 percent of loan defaults. Roughly 96 percent of students at for-profit schools take out loans, compared with 13 percent at community college, and 48 percent at four-year public universities.
Now, for-profit schools are seeing a serious decline in enrollment. The Apollo Group, parent of The University of Phoenix, announced previous quarter earnings that fell and enrollment that fell more than 13 percent. But even with the decline in enrollment, students are still being scammed while losing valuable time and money.
There are now several lawsuits against for-profit colleges. One complaint revealed that a former associate director of admissions at South University had filed a whistleblower lawsuit against parent company Education Management Corporation, alleging fraud against U.S. taxpayers. The complaint alleges recruiters were using false data to lure students into applying for government loans.
Jason Sobek, who filed the suit in 2010, claims EDMC “had a corps of recruiters, all well-trained in sales and closing techniques, who perfected the art of preying on the hopes and dreams of vulnerable students desperately seeking better lives.”
EDMC, which owns several other schools, including the Art Institutes and Argosy University, did not respond to a request for comment from Bloomberg Businessweek, which broke the story.
A lawsuit brought by Colorado’s attorney general against Westwood College was settled for $4.5 million. The suit claimed the school misled students by inflating job-placement rates, giving false information about credit transfers, and telling veterans they could use GI Bill money with ease.
More than half of the settlement will be applied to a debt-reduction program for students, but confusion abounds over which students are eligible. The rest of the settlement money will go to the state and cover attorney fees.
If you are struggling with debt or credit transfers after attending a for-profit school, contact Ligori & Sanders, Attorneys at Law to learn more about your rights. The personal injury attorneys at our firm will help you understand your rights and what can be done. Call me on my cell at 813-254-7119.