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In the News "Fraudulent... deceptive..."

August 5, 2010

VIEW: Chapter 3 of our May 2010 investigation College, Inc. for background on the sales and marketing techniques of some for-profits.

Released on Aug. 4, 2010, the GAO's report [PDF] tested the admissions tactics of a nonrepresentative sample of 15 for-profits. Some colleges performed well, giving students a realistic portrait of federal loans and job prospects, however the GAO found that four of the colleges "encouraged fraudulent practices," and "all 15 made deceptive or otherwise questionable statements."

Some examples? One admissions rep encouraged an applicant to remove $250,000 in savings from a loan application. Another representative, from a beauty college, informed an applicant that barbers generally earn $150,000-$250,000 per year; in truth, 90 percent of barbers make less than $43,000. And when the undercover applicants provided their information on websites that claim to match students with colleges that best fit their interests, they received an average of five calls a day -- some within minutes of filling out the form. One who indicated an interest in business management received 182 calls in a month.

You can watch undercover video of these interactions and read a summary of the GOA's findings here. The report was presented at a Senate Committee on Health, Education, Labor, and Pensions hearing on Aug. 4, resulting a commitment from Sen. Tom Harkin (D-Iowa) to review for-profits' accreditation process.

22 Comments

COMMENTS

This country had better be careful with this. We let Wall Street destroy housing in this country, but we can recover from that. However, our universities are what bring so many from all over the world to our shores. "Universities" like this online diploma mills are diminishing the value of real degrees from our real universities. If allowed to continue unabated, our degrees will mean nothing no matter whether real (from State Colleges, Universities and the Ivy League) or purchased sheepskins from ITT Tech, U of Phoenix Online or any of the other Wall Street backed frauds.

Michael Moffitt / August 5, 2010 3:40 PM

I was really hoping there would be some sort of relief by those who had their opportunity wasted and profited from. What can I do about this?? It's crooked!

Gary B. / August 5, 2010 11:33 PM

Read the report. In several cases where the investigators couldn't come up with anything real, they made something up. One college was dinged for asking the prospective student to envision graduation day. Several took hits for not providing financial aid assistance on the spot, when it takes days or even weeks for that information to come back from the lenders. There were certainly some irregularities uncovered by the sting, but it's a real stretch to say that everything listed in the report is a deceptive or fraudulent practice. This entire sting was a political maneuver, and the presentation of the results lacks integrity.

Thomas Cabernoch / August 6, 2010 6:43 AM

This is awful, but what do you expect when the incentives for education are re-aligned from university posterity, prestige, and institutionality (if you will), to profit.

I disagree somewhat with Mr. Moffitt above in that we cannot hold the diploma mills responsible for the decline of legitimate higher education institutions. I do not doubt that they would love to disclaim responsibility for their own decline as well, but I see no compelling reason for Ivy League schools or otherwise to follow the example of for-profit institutions. Many institutions (Ivy League especially) have coffers so large they could opt to stop charging tuition today, forever.

And so we see the perverse incentives and inherent immorality that surround all business, not just for-profit education. The product is utterly immaterial, whether it is a Baccalaureate's diploma, or a cell phone, or some other little plastic widget - profit is the sole motivator, never the desire for a better widget. It is not uncommon, indeed the norm, for the best product overall to be slaughtered in business by those with the largest profits who can spend more money on marketing and advertising.

Here lies the real threat to the universities: complacency. As long as they sit on their hands and do not call this a problem, other universities can easily be painted with the same money-motivation brush, except it's shaking down alums and a million little fees for campus life instead of the quick paycheck on the way in. Good luck, America! I don't think we're going to dodge this bullet.

Michael Dohrn / August 6, 2010 9:22 AM

You can't really blame the universities for their deceptive practices since their just a healthy response to the educational environment Americans insisted the government create. 30 years ago, the annual tuition in Arizona state schools was $340. And, when people talked about vouchers, no one ever suggested such a program for monopolized state universities (so, the state with the country's strongest charter school laws left the state schools wholly protected). And, education became (and still is) two thirds of the state budget (when you want to find corruption, follow the money). Every single one of the 50 or so private colleges in Arizona was forced out of business by such low fees at public universities. The same problems were created across the country (MIT has long survived by having, 30 years ago, six grad students, who could pay their way doing research, for every undergrad, who had all basically left for poorer abet cheaper educations - and all ivy schools have had to since reduce admission requirements and similarly focus on their graduate / research programs). But, out of the ashes of those private schools our country destroyed came a single phoenix school that quickly become the most successful private university of all time. Please, don't complain now about how they got there when you (and I mean you since you haven't been any part of the solution and so have been the problem) made it impossible for any honest school to survive... it would be too unfairly hypocritical.

TucsonJim / August 7, 2010 12:23 AM

TusconJim I don't think you really understand how higher education works. You make it sound like Colleges and Universities are being squeezed by not being able to charge more, this is in fact untrue. While some Ivy leagues are opting to provide an almost free education due to their massive endowments. Most private and public institutions are actually raising tuition. My private university was 32,000 per year, now it 36,000 and tuition does not include all the fees. My total tuition is 42,000. Where are you getting your information?

tchadensis / August 7, 2010 5:13 PM

The issue is a very serious one and one that will not be solved by anyone except the employers. As they keep getting low quality employees with degrees coming from these universities who do not prepare their students well for the work world. Also these universities will not be able to move up the ladder to doing post undergrad research type of work because it is not profitable. Also, the traditional universities are getting in the game but in a legitimate way so that many of these poor quality schools will go out of business. Additionally, the fact that loans are becoming harder to get will cause these institutions to go out of business or at least slow their growth.

Joseph Apollon / August 8, 2010 6:54 PM

I almost went to CTU online, but decided not to when the admissions rep was pushing me to apply. The admissions rep told me there was no employment guarantee and then she said my salary would be higher than the dept. of labor said that raised a red flag for me. I checked the graduation rates for the most well-known for profit schools, most are posted as unknown. This more than anything made me discontinue my interest in online schools. Above all the cost of tuition is too expensive. I feel the government should do something about this problem. I don't see how you can get the real world experience by being in front of a computer screen. O and Tchadensis fyi, the cost for your total tuition is half of what mine would've been.

kari / August 8, 2010 7:07 PM

I actually work for a private education company. The industry is indeed full of a lot of shady, underhanded operations that prospective students really need to be careful about. There needs to be strong federal regulation and oversight to help clean up the overall industry. Unfortunately, those tend to be the smaller operators who were not part of the GAO sting.

From what I have been able to tell, the larger companies in the industry are pretty much above-board and operate ethically. Unfortunately, their standard method--the higher pressure sales approach--results in admission reps giving in to the temptation to be misleading to students in order to get the enrollment and make a commission. This is wrong, but it is hard to prevent even with good training.

I know that the company I work for does it's own internal controls (including some undercover operations) and has fired numerous admission reps for violating both company policy and the law. Unfortunately despite efforts to keep it clean, there are still some who bend or break the rules.

Hopefully this situation can be fixed without damaging the reputation of the good companies in the industry. Private education plays a valuable role in training the workforce, and in times like these a LOT of people require retraining. Crack down on the shysters, but don't pull down those who are trying to run their businesses ethically.

Peter / August 8, 2010 9:18 PM

I currently work for a "for-profit" university and there are some practices that require immediate attention from federal government. I think most people blame the un-ethical admission advisors but for the most part the advisors don't make any bonuses on how many people they enroll. However; managments do make bonuses based on the admission advisors performance. So they in turn put great deal of pressure on advisors to meet or exceed thier budgets. If for example i don't hit my weekly run rate or monthly run rate and start budget. i will have at first a verbal warning then a written and the third offense can lead to termination. In addition the process of admitting students to the school are just focused on head counts. They never care if students have the capability to be sucessful in the program or have the means to pay for the tuition. Most of the students are not aware of how the loans or interest rates work and they end up with loans with an interest rates as high as 16%. Yes 16% these loans are made to students until recently at my campus they called it a recourse loan. Any person with elementary understanding of loans knows recourse loans bind the lender to a greater deal of scrutiny and lenders can garnish your wages if you fail to make payments toward your principal. We are basically enrolling new students to cover for the students that drop out each quarter. The retention rate is horrific because these students don't have the necessary skills or support on campus to be successful in finishing the program. The new trend has been to cut cost in hiring fewer faculty and putting a majority of the classes offered online. This allows the schools to spend less on faculty but also can enroll more students each quarter since they don't need physical classroom to teach these students in. The process is a joke and i'm ashamed to have participated in this practice in order to earn a living.

dave / August 9, 2010 5:26 PM

Students with little previous academic success are easy prey for "admission consultants" at these colleges. These students are able to rationalize quick degrees and a future away from their current rat-race existence. "I'M more mature now", "This time college will be different", "I'm sot tired of being a waitress (busboy, fast food clerk" etc. etc. etc.

Where is the Federal Government? Reluctant to play the 'referee' in our 'free-market system' we have allowed practices that are eroding our social fabric. Airlines, Housing and now Education are allowing the foxes to reek havoc in the henhouses. Is the public upset? Of course! But where and to whom do we turn for protection

hersh / August 10, 2010 4:35 PM

I am currently a student at a for-profit university, and completed two years at a state university as well. To be honest, the academic work at the for-profit university is just as difficult if not more.

Also, do not forget that most of these institutions are accredited regionally and nationally by independent organizations, just like "traditional institutions."

And for all those who are asserting that online-classes are not as rewarding, I would ask you to attend a public university in California as an undergraduate student. Your professor does not know your name, office hours are a joke, and some professors with tenure hold no authority in their respected field, due to the fact that no matter how incompetent the professor is he or she cannot be terminated.


Finally, as Americans we should always favor private enterprise. Our public education system is not working, too many students are denied the opportunity to further their education, educators are protected with unions and tenured and how are students protected? Large classes, forced to take abstract classes, no personal attention. The private sector can fill this void.

Bill / August 13, 2010 5:31 AM

When self destructive, narcissistic people are in control of power they will always victimize who they can. Simple as that. Our culture is deeply pathological. Deeply pathological.

Heidi / August 15, 2010 11:55 PM

Like many people, I graduated from High School and went to a brick and mortar Catholic university for my Bachelors of Arts degree. I attended 120+ credit hours of lectures, exams and wrote to many numerous papers to remember. My non-profit university facility was more focused on writing books/articles and saving their own positions then the student’s ability to learn the material. Research was the focus and getting those Government grants. It was as an assembly line to get the paying customer (students) through the system. After graduating, I took a hiatus from academics and focused on my career. With my BA, I taught part time for a non-profit community college for 7 years. The perspective was different, we were taught to focus on helping to get grants and other funding. The focus was about 50% on the student. After 10 years, after my undergraduate degree I looked for an accredited ground based/online school to obtain my MBA. As a consumer of education, I did my research and found the school that fitted my needs as a full time government employee. I made sure that it was accredited by more than 1 organization and recognized by the Department of Education. In my case, the non-profit schools were not conducive to my schedule and did not afford the flexibility of a ground based/online school. I took 13 classes online for my MBA degree and obtained my degree. I found that the teaching was student focused and projects were more rigorous then a traditional ground based school. It challenged me not only to learn the theory but to know how to practical apply it to at the job. I think that non-profit schools need to learn from the credible for profit schools. Profit schools are serving a need in the market place for busy working adults that cannot quit their positions and responsibilities to carry the yoke of live part time or full time classes. Non-profit schools realizing the value of this method of education are not developing courses and programs that are 100% online like Texas A&M University. I hope that both can learn from each other to provide students with the best education possible. For now I am going online, increasing my knowledge and going with ground based/online school’s for my education. In fact, I plan to go for my Doctor of Business degree online in the near future.

PapeD / August 19, 2010 10:04 PM

I went to a very well respected brick & mortar for my BA. As a soldier in the US Army, I went to a for profit for my MBA. While I will be the first to say it was by no means a competitive school, I can say it did provide a tremendous amount of opportunity to learn. Yes, there were classmates of mine who I wondered how they got a high school diploma, let alone a BA. Yes, the admissions standards were next to nothing and, yes, there are times when I feel a sense of embarrassment for having attended a school so "obviously beneath me". However, in all fairness, the school did teach and afforded all its students the tools needed to learn what they needed. I think the greatest indicator of the school's value can be found in the number of private business people who were taking courses. They didn't seek a degree to impress anyone, but to learn how to better run their respective enterprises. I think that says a lot.

Aaron / August 20, 2010 4:25 PM

A national for-profit University in my community is known for accepting students who do not have a high school diploma. They say that they will help the student get their G.E.D. while they also begin college courses. The students sign up for student loans. The University gets their money and the students I meet dropped out of school (or dismissed for failing grades) and now are in deep trouble with the loans.

How can this be permitted? How can the University admit students without a H.S. diploma? The University is one of those that you highlighted where the nursing graduates could not get jobs.

Diane / August 21, 2010 7:07 PM

Unfortunately, people who enroll in Capella University, Phoenix and others are wasting their time and money. Most credible companies disregard those degrees.
School isn't just about attending classes + taking notes. It's about being challenged by your peers + professors. It's about spending countless hours with your classmates preparing for a presentation or working on a tedious final project. It is also about building networks. You wouldn't believe the number of doors that open for you courtesy of alums.

capitalistic / August 23, 2010 3:34 AM

Thank you for this valuable report. I work in an employment and training capacity and we have had several of our participants inquire and enroll in various private for profit schools in the Minnesota area. While I believe, all universities and community colleges are in it for profit, these private on-line colleges and others have taken it too far. A few of the "for profit" colleges require the student to sign a contract stating they will be financially responsible for the entire course, whether they complete or not. Most credible colleges and universities will allow a student a certain period to withdraw for whatever reason. We had one student approximately ten years ago,"sign on the dotted line" and was told that she would be making $20-$25 an hour upon completion of a medical assistant program at a local for profit school. We knew that wasn't true, as licensed practical nurses don't even make that much. Due to the high turnover rate for instructors at that particular school, she graduated after 2 1/2 years (would have been one year at a community college) and probably close to $30,000 in debt of students loans, above and beyond what she received in PELL, State and Tribal grants. She finally got a job, paying about $12 an hour. To this date, she is still paying her debt. While every person has their choice of what school to attend, I would hope every student would take the time to research the school, cost and job outlook before signing anything. After all it's like shopping for any other major purchase in your life. Being in default of a student loan could ruin your credit and prevent you from getting certain jobs.

Theresa / August 23, 2010 12:12 PM

Oh please, like anyone should be surprised about this. It's a joke to call those who attend colleges "students"; they are "customers" of businesses that sell education! And it doesn't matter if the school is a public or private institution; all of them thrive in one way or the other by increasing enrollment, but the private schools will really drain your pocketbook. There's a local art college nearby and a young gal I know was accepted to the college and another person exclaimed how the new college student must be a talented artist to be able to be accepted at that school. Please, my artistic skills are non-existant and I know that I could put together an "art portfolio" and beg them to let me spend $22,000 in tuition annually and, guess what?, I'm in! I must be a talented artist! Colleges are a scam in many cases, particularly for certain fields that are the same no matter where you go, like accounting. The best thing you can do is minimize the cost through a combination of community college then transfer to a state college...there's no evidence that people who attend private schools do better in life than those who attend state colleges.

Kim / August 25, 2010 11:18 PM

As has been stated, it's unfair to blame the for-profits since we don't blame a cat for torturing a mouse before eating it. The job description of the cat and the job description of the non-profit is part of their intrinsic nature; the cat to torture mice and the for-profit to make money.

Dick Brandlon / August 26, 2010 9:39 PM

Why is it bad if there are more students receiving government help in the for-profits? And the debt example of the woman finishing with $30,000 in debt? She received her accredited degree. The fact that she did not repay it and is now twice the amount in debt is not the college's fault. And $30,000 debt after 4 years is certainly standard for today's educational environment. How many state colleges have gotten in trouble for their recruitment of athletes?
It seemed to me they set out to do a hatchet job on these very successful colleges.
I am not surprised that there are shyster practices in some colleges. I would expect they would find exactly the same thing in state schools.
Over all, I give FRONTLINE an "F" for this report.

Stephen Mitchell / August 26, 2010 9:54 PM

I am somewhat puzzled as my son was admitted thru having certain grades to lets say Rochester University. His particular course fees were $20,000 per year for 4 years, plus some additional credits at the nearby school of music
He had campus accomodation for a couple of years and then own rented.
The fundamental question is why is a for profit organisation therefore worse than a state or other university that charges, gosh there is a huge book that rates all the national universities.
The issue is two fold:-
1) Why cant you get into a state or national university?
2) If you failed because your academics did not match OK i got it... but you can try again and try to improve grades.
3) If not these guys (for profits) can give you a place because you pay and in theory it is more expensive... they will tell what you want to hear to get you in.
The solution is to set minimum grade standards to stop you in effect wasting your money for a degree that no future employer will respect anyway
4)Why do I know this? I found out the hard way, I did a so called cheap Correspondence college course to gain a professional qualification. I never went to University, it took me 3 years longer than the Normal BSc at university then the 3years sort of tenure ship within the profession and you study in your own time to complete the societies exams.Every time I got interviews, I got the third degree of was my Qualification valid.Never mind references etc
Is it worth the cost of non entity degree. Do the job and prove yourself.
Regards,
Hodgson.


J.V.Hodgson / August 27, 2010 4:08 AM
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