GAO Reveals Fraud and Deception at For-Profit Colleges

By Caralee J. Adams — August 05, 2010 2 min read
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The federal government is painting an unflattering picture of for-profit colleges as businesses that will do just about anything to get students: inflate job prospects, exaggerate value, gloss over credentials and, in some cases, ask applicants to lie to qualify for government aid.

In a report released yesterday, the Government Accounting Office detailed investigations at 15 for-profit colleges. The investigations found that all 15 made deceptive or otherwise questionable statements to undercover applicants working for the GAO and that four encouraged fraudulent practices.

In the investigation, one applicant was encouraged not to reveal $250,000 in savings to have a better chance of getting financial aid. A beauty-school prospect was told to expect a salary of $150,000-$250,000 a year, although 90 percent of barbers make $43,000 annually. Certification in a computer-aided drafting program was being pitched for nearly $14,000 at a for-profit college, although it could be obtained for $500 at a nearby public college.

The report outlines numerous instances in which undercover applicants were misled about the costs of tuition, duration of programs, and quality of their degrees. Many were also hounded by aggressive recruiters who called multiple times to pressure them into enrolling.

The deception, fraud, and questionable marketing practices revealed in this undercover investigation sparked harsh reactions and added fuel to calls for tighter oversight of the industry.

At a hearing on Capitol Hill, U.S. Senator Tom Harkin (D-Iowa) said the GAO findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight. “To the contrary, the evidence points to a problem that is systemic to the for-profit industry: a recruitment process specifically designed to do whatever it takes to drive up enrollment numbers, more often than not to the disadvantage of students,” he said in prepared remarks.

The colleges visited by the GAO were in Texas, Arizona, Florida, California, Illinois, Pennsylvania, and the District of Columbia and included the University of Phoenix and Kaplan College.

UPDATE: Apollo Group, the parent company of the University of Phoenix, issued a statement today acknowledging the GAO findings. Apollo Group Co-CEO Gregory Cappelli said, “While we still have work to do, we have initiated a rigorous compliance process designed to improve oversight of our policies and procedures including our recruitment practices, and we are making significant improvements to the way we train and evaluate our student counselors.”

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A version of this news article first appeared in the College Bound blog.