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For-Profit Colleges Face More Challenges

August 4, 2010

by Agnes Jasinski

A financial aid officer at a for-profit college that closed this week has been charged with felony theft of more than $7,600 in students’ tuition payments. The school, Ascension College in Louisiana, closed quite suddenly to the surprise of the students there, and has been under investigation for what officials say is a misuse of federal aid.

According to an article in The Chronicle of Higher Education, the school had to close when the U.S. Department of Education ruled that it was no longer eligible for federal aid, the school’s primary source of income, based on new rules targeting for-profits. The school already had financial problems before the Education Department’s decision. In recent weeks, students had begun to complain about the cost of their educations there versus the quality. The school had been awarding certificates in fields like office administration and dental assistance.

The news comes on the heels of a report released today by the Government Accountability Office (GAO) pointing to evidence that recruiters at for-profit colleges encouraged prospective students to lie on financial aid applications in order to receive more federal funding. The report also shows widespread misinformation from the recruiters about the cost of their for-profit programs, their quality, and how much money graduates would be expected to make once they received their degrees.

The GAO used four undercover investigators posing as potential students at 15 for-profit colleges to get the information. Recruiters at four of those 15 encouraged financial aid fraud; in one example, a recruiter suggested an applicant not report $250,000 in savings when applying for aid. All 15 of the for-profit recruiters made statements the GAO described as “deceptive or otherwise questionable” in their report. In one example, a recruiter based tuition costs on nine months of classes rather than 12, making the total costs seem much lower than they actually were. In another, a recruiter told an applicant that barbers can earn up to $250,000 a year, a gross exaggeration. The GAO also discovered how incessant some recruiters can be once they know a student is interested in a for-profit education. According to the report, one of the investigators received 180 phone calls in one month at all hours of the day and night after registering to receive information on for-profit colleges.

The GAO was quick to note, however, that there were instances where the investigators were given helpful information, such as warning students about borrowing beyond their means. While the report overall doesn’t bode well for for-profits, especially at a time when legislators are watching the industry more closely and calling for more federal review, there are good options in the for-profit sector. For students looking to get into a particular trade, a flexible schedule, or alternatives to a traditional four-year university, for-profit schools do meet a need. The most important thing is to get your facts from a reliable source. Don’t ever take everything a recruiter at any college, for-profit or not, says at face value. Do your own research in the college search to make sure you’re making the right decision and investing wisely.


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