For-Profit College Scams – Really Think Before Enrolling

by Darwin on August 11, 2010

The GAO released a damning study of the for-profit college industry which showed outright lying and deceptive tactics by personnel in order to dupe prospective students into enrolling in their programs when it was questionable as to whether doing so was in their best interest.  Many of the personnel used high pressure sales tactics and provided erroneous information in order to get undercover prospective students to sign up.

Why is the GAO Involved?

Well, based on the exploding student enrollment at these colleges, the government has issued Pell Grants totaling $4 Billion in 2009 and over $20 Billion in loans to students.  Therefore, our taxpayer dollars are paying for/subsidizing these programs.  In order to conduct their study, the GAO used undercover investigators at 15 for profit colleges.  The GAO was very careful to not name the schools (so neither have I, ehem, lawyers) and claimed that this is not a portrayal of the whole industry, but surely you can for your own opinion after reading the report in its entirety:

GAO Findings

The findings were numerous, but here were some of the most egregious from the report:

  • Undercover applicant was falsely told that the college was accredited
    by the same organization that accredits Harvard and the University
    of Florida.
  • Admissions representative said that barbers can earn up to
    $150,000 to $250,000 a year, an exceptional figure for the industry.
    The Bureau of Labor Statistics reports that 90 percent of barbers
    make less than $43,000 a year.
  • Admission representative told an undercover applicant that student
    loans were not like a car payment and that no one would “come
    after” the applicant if she did not pay back her loans.
  • Admissions or financial aid representatives at all 15 for-profit colleges
    provided our undercover applicants with deceptive or otherwise
    questionable statements. These deceptive and questionable statements
    included information about the college’s accreditation, graduation rates
    and its student’s prospective employment and salary qualifications,
    duration and cost of the program, or financial aid. Representatives at
    schools also employed hard-sell sales and marketing techniques to
    encourage students to enroll.

First of all, I’m not surprised by this at all.  Many of these statements by admissions officers are outright lies, especially by people IN the industry who know the truth.  This is completely outrageous.  From what I’ve read, this is often preying on the poor as well because they are lured into these programs and haven’t conducted thorough research nor had other college opportunities.  I had read this article in BusinessWeek all the way back in April, indicating that these schools were actually recruiting the HOMELESS! – yes, homeless, to attend their schools so they could inflate their bottom line.  Since these folks are often qualified to receive grants and loans in federal money, some of these unscrupulous colleges target them. How this went on for so long is beyond me; perhaps it was the BusinessWeek article that spurred the GAO to finally act.

While I’m a free market guy and I believe virtually all services are best provided in a for-profit free market environment, based on the preponderance of evidence in this report and what I’ve read elsewhere, I really have to question why anyone would use one of these outfits over a typical local, state or community college.  You can get a quality degree there without the stain of this behavior on your resume.

Do You Have Any Experiences with For Profit Colleges?

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1 Kevin Nelson August 12, 2010 at 10:48 am

Great post about a very timely topic given current economic conditions. A few reasons why folks make these choices:
1) admission standards are incredibly low – local community colleges make a concerted effort to enroll students with a reasonable chance of academic success as evidenced by highschool grades and standardized test scores – for profits don’t care – they just want to get the money flowing in
2) a targeted curriculum is attractive if it doesn’t require basic educational courses like english, writing, math etc. – most non-profits have certain core courses that are good for you, just not fun
3) marketing – the mass media spend has a significant influence – your local two year school simply cannot compete with the image these for-profit schools build for themselves on tv, radio and billboards

Unfortunately, even if somone beats the odds, graduates from one of these for profit programs and gets the desired employment, they have often spent 2-4 times as much for the same education available at a non-profit.

2 Denise August 12, 2010 at 3:22 pm

Great information! Thanks for sharing. I always enjoy reading your articles.

3 jim August 12, 2010 at 5:12 pm

I’d say that most of the for profit college industry is a rip off. You’re generally paying more for a poor quality education. There are a lot of scams out there from for profit colleges basically just cashing in on student loan money coming from the government. I’d definitely avoid for profit colleges. There are way too many reasonably priced and better quality 2 or 4 year public and private non-profit universities out there to waste your money on a for profit university.

4 BadBoysDriveAudi August 13, 2010 at 2:25 pm

Here’s the thing: it may be a rip off to those that are fortunate and may even be a rip off for the overwhelming majority of unfortunate folks (through the tax payer subsidizing someone who really doesn’t even attend classes).

But what about that small percentage of people who are homeless, who are willing to go to class, use their small allowance on food and necessities, and ultimately graduate from the program? Is that piece of paper worth anything?

If the act of them getting the degree lands them the opportunity for a job and a way off the streets, then is for-profit education a completely bad thing?

I do agree, however, that the sales tactics are out of hand.

DrJo Reply:

My only comment is that not all for-profit schools are bad although there are those that employ unethical tactics. And for that matter I recently took my oldest son on visits to a number of Universities. Wouldn’t you know that they only admission officer that outright lied to him was at a state school? They invited him in to talk about scholarship opportunities and then when we got there said he wouldn’t qualify but if he attended for a year they would find him money. That’s pretty bad.

Just remember you can’t through the baby out with the bath water. A good portion of the for-profit school need to go since their values are all screwed up. However, there are still those that are very concerned about student success and graduation rates and employability of their students. In fact at least one for profit institution that I can think of can tell you that their students are employed at a rate of 90% while most state universities are going to be in the 60% to 70% range.

Having worked at a for profit industry in the past, I could also add that attendance is top priority and students that miss, I think, two weeks of classes were dismissed from all classes so they couldn’t game the system. Keep that in mind when you lump them all together.

Jack Kindcaid Reply:

1. the same benefits are available at the state colleges as they are at these forprofit rip offs, but at the state schools they will have to showup, study and pay attention.
2. we dont even interview anyone from ANY of these forprofit outfits.
3. If a potential student will pay $30K for a worthless 2 year degree, then they dont belong in ANY college anywhere.

Audiboyincloset Reply:

@BadBoysDriveAudi, Not everyone needs to go to college to succeed in this country. The times of playboys scamming the country and pretending to be robin hood are over. They’re nothing more than a modern day longshanks abusing the system.

5 Joao August 16, 2010 at 10:44 pm

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6 Erik Brown August 25, 2010 at 7:21 am

My wife was in her second semester at one of these schools when I married her. While taking the bus to her class one day she had a talk with a graduate of her school who told her how nobody would hire her based on her degree. Her degree was basically worthless. At about the same time the school was doing a tuition hike. I asked her how much she owed so far and she already owed the same amount that I owe from going to a community college for 2 years and she wasn’t even a year in (their semesters are only like 2 months long.)

So at the end of the semester she went in to withdraw. Then we went to our local community college. They told her to go get her transcript from the for-profit. When she turned up to ask for it it turns out they hadn’t withdrawn her from classes. This time she actually signed some papers, so I hope they actually stopped taking out loans in her behalf.

We also had to go back three times before they gave us the right transcript. These schools are just scams, anyone saying otherwise is full of shit, and basically evil people to want to do something like this to their fellow human beings.

I guess having a little extra cash is worth ruining the lives of people who are already not well off.

NBC Reply:

@Erik Brown, You are aware that they are dismissed from the course after missing two class meetings because there are only 5-6 class meetings in the course, right? You are aware that taking up for these “universities” only shows your ignorance, right?

Larry Nelson Reply:

@Erik Brown, Well you get what you pay for, this loan business at these schools is out of hand. Having students go to schools in hopes of being paid the difference between the tution and the grants/loans is the short road to hell.

7 Erik Brown August 25, 2010 at 8:05 am

Oh, and when my wife applied she was told that they placed 90% of their graduates, which later the same guy acted like he hadn’t even said anything about placement. She was told that she would be interning at the University of Florida teaching hospital (Shands), once again when she brought it up with the same guy later on she got nothing but a blank stare. She was told she would be making 50 thousand a year and the tuition was always much more expensive than anyone told her when we actually got the ledger.

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9 Kelley Rose November 30, 2010 at 4:44 pm

To anyone who has gone to Intercoast College Institute be aware that it is a complete scam. I attented this school and worked there while doing my internship. They charge different fees depending on what loans and grants you get. Students started telling me horrifying stories about their experiences at these schools. I’m amazed at how they have a complete lack of concern for any human being . We as tax payers are footing the bill for these schools only goal is to sell you a lie. EVIL…….

Peter Nolan Reply:

@Kelley Rose, This for profit school scam is the next big mess that will hit our economy. Taxpayers are being ripped off by these for profit schools (use that word loosely here) . They are not really schools, they are really a place to get a worthless piece of paper.

If someone comes in here from one of the local for profits, we dont interview them, it is a waste of time. You dont go to a school that advertises on a mass transit.

10 Joe June 26, 2011 at 6:59 am

I was a victim of the for-profit college scam. The now defunct Lehigh Valley College, which was owned by the Career Education Corporation was using misleading information and false advertisement to get students. Lehigh Valley College was investigated by the Pennsylvania Attorney General, which was back in 2005 and received a fine back in 2006. Lehigh Valley College closed back in December of 2009, which was the Career Education Corporation’s decision to close the college. Their parent company, which is the Career Education Corporation were the ones that gave admissions representatives misleading information. The Career Education Corporation and the college’s they own are scamming prospective students and stealing government money. For-profit college’s are evil and bent on stealing government money.

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