Last month, a company called Education Management Corporation was sued by the Department of Justice. Education Management is a for-profit education company; in fact, it is the country’s second-largest such company, with more than 150,000 students attending classes on more than 100 campuses, where it offers degrees in business, accounting and nursing, among other subjects.
According to the government, Education Management had a “ ‘boiler-room’-style sales culture.” Its recruiters used “high-pressure sales techniques, and inflated claims about career placement to increase student enrollment, regardless of applicants’ qualifications,” as The Times put it in an article about the lawsuit. And it supposedly paid recruiters bonuses based solely on how many students they enrolled — which is against the law.
Although Education Management vehemently denies the charges and vows to fight them, this is hardly the first time a for-profit university has been accused of impropriety. Indeed, during the last half-dozen years or so, scandal has dogged the industry. In recent years, Kaplan, a division of the Washington Post Company, faced allegations that it recruited unqualified students and had an unacceptably high percentage of defaults on its student loans. This summer, it settled a lawsuit (without admitting wrongdoing) that claimed it failed to place students in externships.
The allegations all stem from one essential fact: The for-profit college industry makes its money by recruiting students — overwhelmingly poor and working-class students — who must draw from the federal till to pay tuition. In many cases, as much as 90 percent of the revenue of a for-profit college company comes from the federal government, in the form of Pell Grants and student loans. The more students the companies enroll, the more federal money they get — and the more profit they make.
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