Tuesday, August 3, 2010

GAO Sting: For-Profit Colleges Use Deceptive Marketing

By Andrea Stone

An undercover government probe of for-profit colleges that reap billions in taxpayer money found fraudulent, deceptive or otherwise shady marketing practices in an industry that is coming under increasing congressional scrutiny.

In a report to be released at a Senate hearing Wednesday, the Government Accountability Office's investigation of 15 for-profit colleges found:
  • Four colleges encouraged fraudulent practices, and all 15 made deceptive or otherwise questionable statements to the GAO's undercover applicants.
  • Incognito applicants were encouraged by college personnel to falsify their financial aid forms to qualify for federal aid. In one case, an admissions representative at a privately owned college in Texas told an applicant to fraudulently remove $250,000 in savings despite federal regulations requiring students applying for aid to list all their assets. In another case, an applicant was encouraged to falsely increase the number of dependents in the household on a federal aid form to qualify for grants.
  • College representatives exaggerated the amount of money applicants could earn after graduation. One said barbers can earn $150,000 to $250,000 a year. According to the U.S. Bureau of Labor Statistics, 90 percent of barbers make less than $43,000 annually.
  • College recruiters failed to provide clear information about the length of programs, costs or graduation rates despite federal regulations requiring them to do so. Many applicants were misled by being told they would attend classes for 12 months a year, but were told only the cost of attendance for nine months.
The GAO, which focused its sting on colleges that got 89 percent or more of their revenue from federal student aid, found some instances in which undercover applicants "were provided accurate and helpful information by college personnel, such as not to borrow more money than necessary."

Story continued here


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