GAO Finds Deceptive Practices in Probe of For-Profit Colleges

College financial aidThe independent Congressional watchdog agency said it investigated 15 for-profit U.S. colleges that draw high rates of federal financial aid and found that all “made deceptive or otherwise questionable statements” to its undercover applicants –  while 4 of the colleges encouraged fraudulent practices.
Enrollment at for-profit colleges has soared in recent years to nearly 1.8 million students, and they are taking a big bite out of federal financial aid programs. In 2009, students at for-profit colleges received more than $4 billion in Pell Grants and more than $20 billion in federal loans provided by the Department of Education.
The U.S. Government Accountability Office, the nonpartisan, investigative arm of Congress, was asked to determine whether for-profit colleges are engaging in fraudulent or deceptive practices. However, the GAO also cautioned that results of its undercover tests and tuition comparisons “cannot be projected to all for-profit colleges.”
Without naming the for-profit colleges it investigated, the GAO reported that one admissions representative told an applicant to “fraudulently remove $250,000 in savings” from financial aid application paperwork.
Another college representative exaggerated undercover applicants’ potential salary upon graduation and “failed to provide clear information about the college’s program duration, costs or graduation rate” – despite federal regulations requiring them to do so.
In more than one case, college staff told GAO’s applicants they would attend classes for 12 months a year, but stated the annual cost of attendance for 9 months of classes, “misleading applicants about the total cost of tuition.”
GAO also reported aggressive marketing practices by the for-profit colleges investigated. GAO’s four fictitious prospective students received numerous, repetitive calls from the colleges attempting to recruit the students. The GAO’s applicants had registered with web sites that link for-profit colleges with prospective students.
“Once registered, GAO’s prospective students began receiving calls within 5 minutes,” the GAO said. “One fictitious prospective student received more than 180 phone calls in a month.”
In its probe, GAO investigators posed as prospective students applied for admissions at 15 for-profit colleges in 6 states and Washington, D.C.
The colleges were selected based on several factors. Included were colleges that the Department of Education reported received 89 percent or more of their revenue from federal student aid.
Read the GAO’s full report on for-profit colleges.

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