Lawsuits Address Recruitment Practices at For-Profit Colleges

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March 16, 2012

This week’s for-profit education news features two lawsuits filed against two different companies. One suit was settled; another, from a whistleblower, was just made public.

Both involve allegations that the industry relies on deceptive recruiting practices, and both involve companies FRONTLINE investigated in College, Inc. and Educating Sergeant Pantzke.

+ A complaint unsealed on Tuesday revealed that a former associate director of admissions at South University has 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 this week 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. [FRONTLINE obtained Westwood recruitment calls received by members of the military in 2008-09; listen to excerpts here.]

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.

Westwood is also required to disclose, among other things, the full cost of a degree and information about credit transfers and GI Bill funding. Westwood says that many of these requirements are already in place, and have been since 2009.

Bonus: By Any Other Name: For-Profit Colleges Watch Their Language” –– The Chronicle of Higher Education reports on “Project Rose,” an internal industry campaign to “de-emphasize its retail-grade jargon”for example, using “university system” rather than “parent company” or “counselors” rather than “recruiters.”  You can view the industry’s full PowerPoint presentation here.


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