For-Profit Colleges under Fire on All Fronts

Posted August 11, 2010 in Consumer Law by Arthur Buono

In the past couple of weeks we’ve heard some pretty bad things about the for-profit education industry. Students graduating with debt loads they’ll never repay. Outright fraud in the admissions process. Now comes the revelation that for-profit universities thrive on GI Bill money intended to give a hand to veterans readjusting to civilian life.

     
  • For-profit schools not the same as traditional colleges and universities
  • Big business and profit motive drive shady practices
  • Many graduates walk away with little to show except heavy debts
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Deceptive Recruiting, Lousy Education, Big Debts

The for-profit education industry differs from traditional non-profit colleges and universities. They’re in it for the money. Some big players dominate the market, like the Washington Post’s Kaplan University. Business is so good it accounts for most of the Post’s revenue and earnings, though few people realize this.

To understand how big a deal this is, we only have to look at what happened when the Post announced their latest quarterly results. The stock tanked because the Post said new rules governing how for-profit schools operate could hurt its earnings. Kaplan featured prominently in the announcement last week that the Senate will investigate shady practices at these schools. A Government Accountability Office report said Kaplan recruiters encourage applicants to lie on student loan documents, and lied themselves about the school to applicants.

The Department of Education also doesn’t like what it sees when it looks at what happens to students of these schools after graduation. Many of them can’t find jobs good enough to pay back the student loans, which bankruptcy can’t get rid of but you may be able to renegotiate. Some students have sued their schools because of this. Now the Department is saying that for-profit schools are not delivering what they promise. And this makes the story about how much GI Bill money goes to these schools so troubling. Taxpayers never like when their money’s wasted. When it’s used to take advantage of service members who’ve given so much to the country, it’s a double shame.

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