Fraudulent Tactics Lure Students to For-Profit Colleges

It sounds like an oxymoron, or at the least, a very bad idea. But ‘for-profit’ colleges, run by private corporations and often charging far more than their public counterparts, are spreading faster than you can say “massive debt” or "the next bubble to burst."

Enrollment in for-profit colleges has grown from about 365,000 students to almost 1.8 million over the last several years, according to the US Government Accountability Office (GOA). But a new report by the GOA reveals that fraudulent and invasive recruitment practices may be at work behind the scenes of the sector’s rapid growth.

Undercover investigators posing as prospective students found that out of the 15 for-profit colleges they approached, all 15 made “deceptive or otherwise questionable statements” on details such as their accreditation, total cost of tuition, and applicants’ earning potential after graduation. Four colleges actively encouraged fraudulent practices such as removing a $250,000 inheritance from student loan applications, saying that it’s not the government’s business.

The investigation also examined for-profit colleges’ recruitment practices by signing up fictitious prospective students on websites designed to connect interested students with colleges. These ‘students’ received calls within 5 minutes of being registered, the GOA reports, and one ‘student’ received over 180 phone calls in a month, at all hours of the day and as late as 11 p.m.

What’s in it for college recruiters, besides a potential restraining order? A for-profit model subsidized by a hefty serving of the student loan pie that’s topped $4 billion in Pell Grants and more than $20 billion in Department of Education funding. While there’s nothing wrong with loans being utilized to support a student’s education, there’s nothing right about roping students into loans they are much more likely to default on than public-university grads, especially when using deceptive strategies such as these:

• An undercover applicant to a certificate program in Washington, D.C. was told by an admissions representative that barbers can earn up to $150,000 to $250,000 a year.
• An applicant to a certificate program in Florida was told that student loans were “not like a car payment” and that no one would “come after” her if she did not pay back her loans.
• An applicant for a massage therapy certificate was told that the $14,000 price tag was a good value, while the same certificate was available at a local community college for $520.

In short, it's a dirty mess. But there’s hope for a clean-up on the horizon. The Obama administration recently proposed regulations that would curtail federal student aid to for-profit colleges whose graduates don’t earn enough to repay their loans. Final rules will be issued in November, but until then, here’s hoping students educate themselves before they get schooled the hard way.

Photo credit: *_filippo_*