Feds targeting for-profit colleges

Here’s a little more about today’s New York Times about the increasingly sleazy world of for-profit colleges.

(My NC Policy Watch colleague Rob Schofield blogged about it earlier this morning.)

The news: A fraud lawsuit filed Monday by the U.S. Department of Justice and four states claims that Education Management Corporation, the nation’s second-largest for profit college company, was misrepresenting the number of students it enrolled in order to get $11 billion in state and federal aid.

Consumer groups have been sounding bells for quite a while about the growing for-profit college industry, saying its employed predatory practices to convince students to rack up tens of thousands of dollars in federal and personal loans  for lackluster educations.

Here’s a snippet from today’s New York Times story:

The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.

While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.

How it affects North Carolina: The company has a presence in the state, and runs the Art Institutes of Charlotte and the Durham-based branch of the school, Art Institute of Raleigh-Durham.

Both charged more than $20,000 a year in tuition in 2009 and had retention rates less than 50 percent, meaning less than half its students came back after a year, according to data obtained from the U.S. Department of Education earlier this year. The graduation rate for the Charlotte campus was 49 percent.

To give some perspective, the well-known UNC School of the Arts in Winston-Salem (which has both high school and college tracks), averaged $5,000 in tuition for its college students and had retention rates of 77 percent during that same time period.

Not very hard to see where the better deal is.

3 Comments

  1. [...] The genius of the market at work Post on August 9, 2011 by Rob Schofield No Comments (Note- Sarah Ovaska has much more on this in this post). [...]

  2. [...] (Note- Sarah Ovaska has most some-more on this in this post). [...]

  3. francesjenkins

    August 9, 2011 at 7:41 pm

    Sarah,
    Is there a reason you are ignoring the Ruffin Poole, Bev Perdue and Hobbs
    possible illegal fund raising activities? You seem to be so good on exposing the Republicans but you can not bring yourself to investigate the corrupt Democrats. When the average citizen reads your work, they always question, because you never investigate the other side. Exposing juat one side is never honest. Remember, the Judge say in the Ruffin Poole sentencing, there is more to this story. Yet, you, Rob, Greg, Fritzsimon appear hell bent on writing just about Republicians. Why is that?