April 3, 2014

More Probes, Oversight (and Dress Codes) for Predatory For-Profit Colleges


The for-profit college industry is lobbying furiously to prevent the Obama Administration from issuing a strong “gainful employment” rule that would cut off aid to career training programs that consistently leave students with insurmountable debt. But around the country this week there is more evidence that major players in this industry have been engaged in abusive, predatory behavior– and that law enforcement agencies and prospective students alike are getting the message:

  • Massachusetts Attorney General Martha Coakley today sued Corinthian Colleges in Suffolk Superior Court, stating, “We allege that this for-profit school aggressively recruited and misled students by falsely promising high quality, successful training programs, and instead left them with exorbitant student loan debt and without proper training or a well-paying career.” Coakley pledged her office “will continue to investigate the for-profit school industry as we continue to see students and taxpayers suffer the consequences of high default rates, inadequate training, and mounting debt.”  California’s AG, Kamala Harris, already was suing Corinthian, and thirteen other state AGs, as well as at least four federal agencies, are investigating the company.
  • Senators Dick Durbin (D-IL) and Tom Harkin (D-IA) introduced a bill today to improve coordination among federal agencies that oversee for-profit colleges in order to better enforce the laws and increase accountability.  Rep. Elijah Cummings (D-MD) will introduce similar legislation in the House.  Harkin said, “Far too many students seeking the American dream are instead enrolling in schools that leave them with worthless degrees and burdensome debt.” Durbin added, “For many years, for-profit schools were allowed to operate one step ahead of the law.  As the number of investigations by federal, state and local agencies increase, however, I think we are starting to turn the corner.”
  • Apollo Group, owner of the University of Phoenix, disclosed Tuesday that it had received a subpoena from the U.S. Department of Education seeking “information relating to marketing, recruitment, enrollment, financial aid processing, fraud prevention, student retention, personnel training, attendance, academic grading and other matters.” (That same day, the University of Phoenix named as its new president — welcome! — Timothy P. Slottow, chief financial officer of the University of Michigan.) Mass. AG Coakley and Florida AG Pam Bondi also are investigating the company. The Education Department finally seems ready to step up its enforcement and investigate predatory activity; in January we learned that the Department requested documents from Corinthian, saying in a letter to the company that there were signs of “systematic deficiencies” in its operations and that the company “has admitted to falsifying placement rates and/or grad and attendance records….”
  • EDMC, the second-biggest for-profit college company after the University of Phoenix, announced Tuesday another round of layoffs — 200 staff nationwide will be let go, as the company’s student enrollments continue falling. EDMC is now under investigation by seventeen state attorneys general, and is being sued for fraud by the Justice Department. Perhaps as a result of all this financial and investigative pressure, EDMC school The Art Institute of Fort Lauderdale on Tuesday issued to its staff a new dress code, effective the next morning. Among the rules: no sneakers, flip-flops, leggings, “spandex or lycra stretch clothing,” “halter or tube tops,” or “hats of any kind.” 

This article also appears on Huffington Post.