GAO finds fraud in for-profit recruiting

For-profit college recruiters told applicants to lie to qualify for more federal aid, inflated their future earning potential and let them cheat on entry tests, reports a Government Accountability Office study that used undercover investigators. Four of 15 unnamed colleges encouraged fraud, says the GAO. “All 15 made deceptive or otherwise questionable statements” to investigators posing as applicants.

Stocks of for-profit companies held up when Education Department rules limiting federal loans to for-profit students were announced but fell when the GAO report was released.

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  1. These findings are no surprise, the competition among the for profits has become extremely intense in the past four or five years. The push to maintain earnings projections will of course have a trickle down effect. This is too bad because I believe that the pressure is causing otherwise honest people to cut corners for fear of losing their jobs in an unstable economy.

    It would irresponsible to write off these institutions entirely because there is value in earning an education, but reform is probably necessary and most likely pending. That being said, the fallout from these events may have the positive effect of driving students toward lower cost not-for-profit options.

  2. tim-10-ber says:

    How bad is it in tax-exempt schools? It goes on there too but to what extent?

  3. I get dozens of solicitations from for-profit colleges promising me teaching degrees. I think many of them are probably at best worthless. Who is going to hire someone with these credentials when there are hundreds of experienced teachers competing for scarce jobs? They may have been viable when the economy was good and teaching jobs were scorned, but not right now.

    And then there is the outright fraud (I love this story for some reason — it needs to be on Dateline):


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