U.S. to fine for-profit colleges for false promises about graduates' prospects

Authored by reuters.com and submitted by flashlight2
image for U.S. to fine for-profit colleges for false promises about graduates' prospects

Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly

WASHINGTON, Oct 6 (Reuters) - Some 70 U.S. for-profit colleges, including some of the largest, were sent notices that the Federal Trade Commission could impose "significant financial penalties" if the schools deceive students about how successful their graduates were, the agency said on Wednesday.

The FTC commissioners, who often split along party lines, voted 5-0 to use a dormant penalty authority against any school that, for example, overstated how likely it was that graduates would get jobs and how much they could hope to earn.

The notices were sent to schools that included "the largest for-profit colleges and vocational schools" in the United States, the agency said in a statement, while adding that a school receiving a letter was not an indication of wrongdoing.

Complaints about for-profit schools rose some 70% between 2018 and 2020, the agency said.

The notices echo an effort by the Obama administration to pursue for-profit schools whose former students have high loan default rates. At least one chain of schools, Corinthian Colleges, collapsed when its students were denied access to federal student loans.

"For too long, unscrupulous for-profit schools have preyed on students with impunity, facing no penalties when they defraud their students and drive them into debt," said FTC Chair Lina Khan in a statement. "Working closely with our state and federal partners, we’ll be monitoring this market carefully."

The letters were sent to the University of Phoenix, DeVry University and Grand Canyon University, among others.

A spokesman for Grand Canyon declined to comment but said that the school was now a nonprofit, although he said that the Education Department continued to treat it as a for-profit and the issue was the subject of litigation. The other two schools did not respond to a request for comment.

Reporting by Diane Bartz; Editing by Cynthia Osterman

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claire0 on October 7th, 2021 at 11:51 UTC »

Why don’t they take the money from those fines and give it to the people they swindled? If the fine isn’t enough to compensate all the victims, it’s not high enough.

MagicJasoni on October 7th, 2021 at 11:40 UTC »

I worked for a brief time at a for-profit college, and the machinery behind the scenes was impressive and depressing. The "admissions reps" were required to get a certain number of students enrolled every week, and they had to make a certain number of "contacts" every day.

Financial aid "advisers" would encourage students to max out their financial aid (this was in early 2000s) and would actually discourage students from keeping the number near the tuition. Several students caught on to this, and realizing they would never get kicked out, would show up at the start of the semester for two classes and then leave with all of the maxed out aid they received.

I left not long after a young women showed me her financial aid debt: after two years of training to become a nurse, she had hit about 45k.

How did this college get people so interested? It would promote ANY employment as "successful." So, if you worked at McDonald's, and got a degree from this college, and continued to work at McDonald's, well, you had a job, so that was a success. Naturally, most of the people who went there were already working shit-tier jobs and were going to the college to get out of them, so the college was boasting something like a 90% "success" rate for graduates. Very few actually ever changed their jobs, or the field they were in (retail, fast food, etc).

This was all in the early 2000s, of course, before a lot of regulations came in.

Wes_WM on October 7th, 2021 at 11:25 UTC »

In 2009 I went to Universal Technical Institute and they were notorious you’d come out making 100k. Its 12 years later, they have the same reputation, and no one comes out of there making close.