July 30, 2015

Mass. Attorney General: For-Profit College Kaplan Deceived Students

Screen Shot 2015-07-30 at 6.25.26 PMMassachusetts attorney general Maura Healey today announced settlements of her investigations of two large for-profit college chains — Kaplan and Lincoln Technical Institute — for unfair and deceptive student recruiting practices. Kaplan will pay $1.375 million to former students, and Lincoln Tech will pay out about $1 million.

Court documents filed in the matters describe the abuses that Healey found.

According to Healey, Kaplan Career Institute, which had campuses in Charlestown and Boston’s Kenmore Square, got students to enroll “with harassing sales tactics and misleading representations in its recruitment materials concerning its educational program and employment.” Healey found that Kaplan’s website and its recruiters claimed job placement rates for Kaplan’s Medical Assistant and Medical Billing and Coding programs as above 70% when in fact the rates were significantly lower. Kaplan also promised to help students find jobs, but students told Healey’s office “that the job listings provided by Kaplan were from publicly available resources and that Kaplan did not provide any special services or programs to assist students and graduates in their job search.” Accordingly, Healey said in her court filing, “Kaplan unfairly or deceptively induced students to enroll….”

The attorney general noted that Kaplan no longer operates any Kaplan Career Institute schools in Massachusetts. Under the the settlement, Kaplan must give the attorney general’s office notice “before attempting to open or re-open any for-profit school campuses in Massachusetts.”

Kaplan’s lawyer in the matter was John Hanify of the international law firm Jones Day; he is described in a trade publication quoted on his firm’s website as “a ferocious advocate.”

Kaplan is owned by Graham Holdings, the corporation run by Donald Graham, the same company that previously owned the Washington Post newspaper. Graham has been an aggressive lobbyist in Washington against efforts by the Obama Administration to hold for-profit colleges accountable for waste, fraud, abuse, and bad student outcomes.

Graham’s status as an elite Washington insider has led many influential people in the capital to assume that Kaplan is “one of the good ones.” In reality, Kaplan, which has been getting as much as $1.5 billion annually from taxpayers through student grants and loans, has a troubling record of misleading students, not far removed from the notorious, now-shut down Corinthian Colleges, in which Graham’s company also has owned a major stake. (Graham Holdings board member Ronald Olson, a Los Angeles lawyer, has long represented Corinthian in court.)

Like Corinthian, Kaplan’s misdeeds are now being probed by law enforcement. Kaplan has been under investigation by at least four other state attorneys general in the past few years, and it agreed this year to pay about $1.3 million under a settlement with the Justice Department to resolve whistleblower allegations that it employed unqualified instructors at its campuses in Texas.

Kaplan, as well as Lincoln Tech, admitted no wrongdoing in the Massachusetts settlements, and in statements to the media each company denied the attorney general’s allegations.

Healey asserts that although Lincoln Tech’s website states that students would “[b]uild the foundation for a career in law enforcement and private security with Criminal Justice training at Lincoln,” in fact “many students could not find work in these fields. Lincoln improperly counted temporary jobs, part-time jobs, and jobs outside the students’ field of study – such as general retail positions – toward its placement statistics.”

Healey found that “Lincoln also allegedly used an admissions manual that instructed recruiters to ‘bring out the pain’ in potential students so that they would feel pressure enroll. Lincoln’s recruiters used scripted questions to ‘establish unhappiness, create urgency,'” and “[r]ecruiters were required to make at least seven attempts to contact the student within the first three days in order to persuade them to enroll.”

Under the settlement, Lincoln Tech agreed to change its practices, including being honest with students about the transferability, or lack thereof, of Lincoln credits to other schools, as well as the lack of agreements between Lincoln and employers to hire Lincoln graduates. Lincoln Tech also agreed to stop calculating its job placement rates to include as placed people who work as waitresses, babysitters, housekeepers, or janitors, or otherwise outside a student’s field of study.

The amounts these companies are required to pay in the settlements are, unfortunately, a drop in the bucket given the huge volume of taxpayer dollars they have been taking in. It’s also unfortunate that the settlements provide only a bare bones suggestion of what Healey’s investigation found concerning wrongdoing by the schools.

But the cases underscore that law enforcement agencies and lawmakers alike now recognize the magnitude of marketing and recruiting abuses in the for-profit college industry and are starting to act. This week, the largest for-profit college, the University of Phoenix, disclosed that the Federal Trade Commission is investigating whether the school has engaged in deceptive practices.

And Senator Sherrod Brown (D-OH) introduced a bill to bar colleges from using federal student aid to pay for advertising, marketing, and recruiting. It won’t go anywhere, given the influence of industry campaign contributions and revolving door lobbying on Capitol Hill, but it would surely be the right thing to do.

This article also appears on Huffington Post