Feds Uncover Fraud and Deception at For-Profit Colleges

The U.S. Government Accountability Office conducted undercover testing to find out whether for-profit colleges are engaging in fraudulent, deceptive or questionable marketing practices. As recipients of over $4 billion in Pell grants and more than $20 billion in Department of Education federal loans, for-profit colleges have been come under federal government scrutiny. The GAO checked 15 for-profit colleges and found that four of them encouraged fraudulent practices and all 15 made deceptive or questionable statements to its undercover applicants. Some college personnel encouraged four applicants to falsify their financial aid forms so they would qualify for federal aid. Other college representatives exaggerated the potential salaries applicants could earn after graduation, and failed to offer clear information about the duration and cost of the college's programs. They also misled applicants about the total costs of tuition and failed to provide information on their schools' graduation rates. In some instances, admissions staff pressured applicants to sign a contract for enrollment before letting them speak to a financial adviser about program costs and financing options. The GAO also compared for-profit colleges' tuition with those of other colleges in the same geographic regions, and found that for-profit colleges cost substantially more for comparable certificates and associate's degrees than nearby public colleges. For example, a student pursuing a certificate in massage therapy was told at a for-profit college that the cost of $14,000 for the certificate was a good value, but the same certificate from a local community college cost $520. You can view the undercover videos of the frauds committed here.