For-Profit Colleges Mislead Students, Report Finds

Andy Nguyen

Andy Nguyen

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The report gave specific instances in which some colleges encouraged fraud. At one college in Texas, a recruiter encouraged the undercover investigator not to report $250,000 in savings, saying it was “not the government’s business.” At a Pennsylvania college, the financial representative told an undercover applicant who had reported a $250,000 inheritance that he should have answered “zero” when asked about money he had in savings — and then told him she would “correct” his form by reducing the reported assets to zero, a change she later confirmed by e-mail and voicemail.

At a college in California, an undercover investigator was encouraged to list three nonexistent dependents on the financial aid application.

In addition to the colleges that encouraged fraud, all the colleges made some deceptive statements. At one certificate program in Washington, for example, the admissions representative told the undercover applicant that barbers could earn $150,000 to $250,000 a year, when the vast majority earn less than $50,000 a year. And at an associate degree program in Florida, the report said, a prospective student was falsely told that the college was accredited by the same organization that accredits Harvard and the University of Florida.

According to the report, courses in massage therapy and computer-aided drafting that cost $14,000 at a California for-profit college were presented as good values, when the same courses cost $520 at a local community college.

For-Profit Colleges Mislead Students, Report Finds - NYTimes.com
 
I think for profit universities go against the spirit of higher education. If someone wants to take classes to change careers the USA has a wonderful thing called the community college system. Many classes are at night and online and you can easily go onto a state school for your 4 year degree. These for profit universities pray on individuals who think education is going to save them. More times than not they end up with a boat load of student loans (can never be discharged even with bankruptcy) and no jobs because of the lack of tangible skills these programs offer. Very sad and disheartening.

FYI, there was an article all about this recently. Talked about how the adcoms would game the system to get federal funds. They also will buy small colleges in order to get their accreditation. Such a scam.
 
How does this "for-profit" college system work? What is this profit and where does it go to?

I mean, employees at the "non-profit" schools still make reasonble salaries.
 
coolharvard said:
Then why do private schools like Ivy League schools or Stanford charge such high tuition if they are "non-profit"?

I mean, if a private school charges $4K for a class, then I am sure somebody from that school makes profit from that $4K of tuition.
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The top schools give a free-ride full scholarship to many students who are from poor families but are extremely smart. They specifically look for people who are from poor backgrounds but have worked hard throughout school and got good grades and SAT scores. They also build up their endowments. Harvard has got an endowment of around $30 Billion.
 
TraderJoe said:
The top schools give a free-ride full scholarship to many students who are from poor families but are extremely smart. They specifically look for people who are from poor backgrounds but have worked hard throughout school and got good grades and SAT scores. They also build up their endowments. Harvard has got an endowment of around $30 Billion.
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I think this was more common thirty or forty years ago than it is today but I don't have references. They build up their endowments. Their tenured staff and their administrators are paid well -- the latter very well. In return they offer a brand name -- though I think studies have revealed that the cachet of the brand name isn't economically justified by the exorbitant fees. The for-profit and on-line degree mills don't even offer a brand name, frequently not even an accredited qualification. And since this is the land of no-holds-barred laissez-faire, federal and state regulation of these cowboy outfits seems to be conspicuous by its absence. The meretricious product these outfits offer requires misleading advertising. Caveat emptor.
 
Man, Goldman just cannot stay out of the news. For profit education is going to have a serious blow back and it is coming soon. They have been manipulating their placements and track record to keep the checks flowing. Seems as if enough people are finally starting to wise up to this scam.

As for the woman in the article, she could of easily found out that this was a scam. A couple hours on Google would turn up school rankings and worthwhile places to go. A fool and their money is easily parted. Still holds true in 2010.
 
Anthony DeAngelis said:
Man, Goldman just cannot stay out of the news. For profit education is going to have a serious blow back and it is coming soon. They have been manipulating their placements and track record to keep the checks flowing. Seems as if enough people are finally starting to wise up to this scam.

As for the woman in the article, she could of easily found out that this was a scam. A couple hours on Google would turn up school rankings and worthwhile places to go. A fool and their money is easily parted. Still holds true in 2010.
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For Goldman, it's all business,..
 
It is a bit sad though. These colleges are making a lot of money which comes directly from the Federal Government in the form of student loans. 85% of their revenue comes from the Federal Government. The students get a worthless piece of paper and then get a $12 an hour job and they have $100,000 of student loans to pay off. Once they default on their students loans, the interest rate increases sharply and all sorts of penalties are added and they have to deal with the harassment from the collection agencies for the next 25 years. Basically, these colleges are preying on the students and the students don't realize it because the money is coming directly from the Federal Government.
Somebody sued a college in NYC last year to get back her $70,000 tuition money. What happened?
 
Andy said:
The suit against Monroe College is pending. Monroe is a for-profit, family-owned business school whose 23% of its graduates or dropouts defaulted on federal student loan. Nearby private Fordham University default rate is 3.6%
For-profit Monroe College sticks taxpayers with students' unpaid loans - NYPOST.com
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It is somewhat ironic that these for-profit schools sell a dream to the uninitiated.

Education or a good college degree is sometimes the only opportunity some folks have to pull themselves out of poverty..instead, some of these students are stuck with life long debt.

At the end of the day the shareholders need to be kept happy.
 
These students don't know what will happen after they default on their student loans. The interest rate increases from 6.8% to 11%. All kinds of penalties are added. It goes to a collection agency. Within seven year the amount owed increases from $100,000 to $200,000, and it just keeps increasing. Every day the students will receive abusive phone calls. Some collection agencies even call them at work and abuse them and their co-workers. If they buy a house or car, the collection agency takes a lien on it. The collection agency tries to freeze their bank accounts. This goes on for 25 years and these poor suckers cannot even file for bankruptcy. They can only curse the college which took advantage of them, but I don't think that the private for-profit colleges care too much about it.
 
TraderJoe said:
These students don't know what will happen after they default on their student loans. The interest rate increases from 6.8% to 11%. All kinds of penalties are added. It goes to a collection agency. Within seven year the amount owed increases from $100,000 to $200,000, and it just keeps increasing. Every day the students will receive abusive phone calls. Some collection agencies even call them at work and abuse them and their co-workers. If they buy a house or car, the collection agency takes a lien on it. The collection agency tries to freeze their bank accounts. This goes on for 25 years and these poor suckers cannot even file for bankruptcy. They can only curse the college which took advantage of them, but I don't think that the private for-profit colleges care too much about it.
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These days they deduct it from your pay check.
A friend of mine with student loan worked as a consultant for wall street banks for few years after college. As soon as he converted to full-time employee of a bank, they started deducting his student loans. HR said they can't do anything.
 
elliot said:
These days they deduct it from your pay check.
A friend of mine with student loan worked as a consultant for wall street banks for few years after college. As soon as he converted to full-time employee of a bank, they started deducting his student loans. HR said they can't do anything.
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The USA as a debtor's prison. Indentured servitude.
 
bigbadwolf said:
The USA as a debtor's prison. Indentured servitude.
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This is really true. When I came to US for work I bought a new car for $20K within a week on borrowed money. Later I realized I am paying 10% interest. Got a credit card in week. The headhunter who brought me to US paid my apartment security deposit, so I stayed in a luxury apartment.
Finally I left with no savings, as I was paying most of my salary to car loan, credit card bills and rent.
 
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