Ed. The odd thing is that somehow “non profit” institutions are not getting this scrutiny. As discussed elsewhere on this blog I am very concerned that Western Governors does all that is being alleged vs. Pheonix. Beyond all that, WGU’s mentor model, by paying people to help students compete coursework BUT explicitly NOT teaching subject matter, would seem to encourage another kind of fraud. Read more about WGU here.
from Huffington Post: (abstracted)
Top prosecutors in 10 states have convened a joint investigation into potential violations of consumer protection laws by for-profit colleges, Kentucky Attorney General Jack Conway (D), who is leading the multi-state effort, said in an interview with The Huffington Post.
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The for-profit higher education industry, which includes a vast swath of colleges ranging from the more than 400,000-student University of Phoenix to small mom-and-pop beauty schools, is facing intense scrutiny from the federal government due to growing federal student loan default rates at many schools. Although only about 10 percent of college students nationwide attend such for-profit institutions, the schools account for nearly half of all student loan defaults, leaving the government to pick up the tab.
“A lot of people who are in Washington right now want to run around talking about fiscal responsibility,” said Conway, who issued subpoenas to six for-profit schools in Kentucky last year, seeking information on job placement claims made to prospective students and management of financial aid dollars. “Well, making certain that $25 billion in federal education dollars doled out is being spent in a way that appropriately trains people and prepares them for job opportunities that are out there … That, to me, is a fiscal responsibility issue.”
Conway said, “the investigation so far involves civil violations, not criminal activity. ….
The Department of Education has stepped up its scrutiny of for-profit colleges in the past year, proposing stronger federal regulations regarding bonuses or raises given to recruiters based on enrollment numbers. The department has also drafted rules regarding student loan accountability, which could cut off funding to programs with a track record of enrollees failing to pay back student loans and facing high debt loads.
The industry has mounted an aggressive, multimillion-dollar lobbying campaign against the student loan regulations, saying they unfairly target for-profit colleges and would restrict college access to low-income students who attend such schools in large numbers.
The multi-state investigation comes as the Department of Justice is also stepping up its involvement in litigation against for-profit colleges. This week, Education Management Corp. of Pittsburgh, the second-largest publicly traded college corporation, acknowledged that the U.S. Attorney of Western Pennsylvania had intervened in a civil case that had been brought against the company…….