An undercover investigation of for-profit colleges' recruiting tactics

• Congress's 'Secret Shopper' (Inside Higher Ed)

     A government report detailing the findings of an undercover investigation of for-profit colleges’ recruiting tactics reveals admissions and financial aid officers engaged in unethical and sometimes illegal practices, all in the interest of persuading students to enroll and obtain federal financial aid.
     The report, along with an accompanying video of undercover footage, is the culmination of a three-month effort by the Government Accountability Office, Congress’s investigative wing, to determine whether and to what degree for-profit colleges are engaging in “fraudulent, deceptive or otherwise questionable marketing practices.” A copy of the report is available here.
     Both the report and the video will be released Wednesday morning at the Senate Health, Education, Labor and Pensions Committee’s second oversight hearing on the for-profit sector, where Gregory D. Kutz, GAO’s managing director of forensic audits and special investigations, is set to testify.
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     Undercover investigators posing as students found that employees at all 15 for-profit colleges visited for the investigations made “deceptive or otherwise questionable statements” to students about accreditation, graduation rates, employment outcomes, program costs or financial aid.
     At four institutions visited, admissions or financial aid officials encouraged students to submit fraudulent financial information in order to qualify for federal aid, the GAO says in its report.
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     …Some institutions were chosen because the Education Department reports that they receive at least 89 percent of their revenues from the Title IV federal student aid programs, while others were chosen based on their location in a state that was among the top 10 recipients of Title IV money.
     Because the investigators visited an admittedly specific group of institutions that were already raising red flags for the Title IV program, advocates for for-profit colleges will almost certainly challenge the report’s findings (as they have done in response to many newspaper reports and other investigations), arguing that the GAO cherry-picked institutions where data from the U.S. Department of Education already hinted at potential improprieties, and that the institutions cited represent “bad actors,” not the sector’s norm.
     The investigators also submitted contact information for four prospective students with fictitious identities to “lead generation” websites that supply colleges with names of interested students, and encountered aggressive behavior, they said. Some students began receiving marketing calls from colleges within five minutes of submitting the information and, over the course of a month, one received more than 180 calls. Some came as late as 11 p.m.
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     More damning than aggressive calls are instances in which college employees encouraged prospective students to commit fraud, or conveyed incomplete or false information about the institution’s costs and student outcomes.
     The GAO sent two prospective students using fictitious identities to each of the 15 colleges it investigated -- one with income and assets low enough to qualify for a Pell Grant and the other with $250,000 in savings and annual income too high to qualify for any aid other than unsubsidized loans.
     At four privately-owned colleges, the agency said, undercover students encountered admissions or financial aid officers who encouraged them to submit false financial information to improve their chances of eligibility for federal financial aid.
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     At all four institutions where college employees encouraged applicants to commit fraud, the applicants reported having just received an inheritance of $250,000 – enough to pay full tuition without any grants or loans – and yet were, in all four instances, encouraged to take out loans and offered assistance in altering their financial information to become eligible for federal grants and subsidized loans. But, the report said, “[I]t was unclear what incentive these colleges had to encourage our undercover applicants to fraudulently fill out financial aid forms given the applicants’ ability to pay for college.”
     Not all colleges encouraged prospective students to commit fraud, but all were found to have made “deceptive or otherwise questionable statements” during the recruitment process, the GAO report said.
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     At all but two of the colleges visited, college employees offered deceptive or questionable information about graduation rates, exaggerated likely earnings, or guaranteed applicants jobs after graduation….
     At six colleges in four states, according to the GAO, admissions representatives told undercover applicants that they could not speak with financial aid officers or find out what aid they qualified for until they completed the college’s enrollment forms and paid a small application fee.
     Two colleges told undercover students they could earn rewards like a gift card or an MP3 player by recruiting other students – a practice that could run afoul of a federal statute on “incentive compensation,” depending on the monetary value of those items….

• See also Undercover Investigation Finds Widespread Deception in Marketing by For-Profit Colleges (Chronicle of Higher Education)

• California Dreamer (Inside Higher Ed)

     Much of the news surrounding the University of California system has involved whether the network of universities will be able to survive its current budgetary crisis without shrinking in size or quality. In that context, it is no surprise that Christopher Edley Jr.’s plan to use online education to expand the university’s footprint “from Kentucky to Kuala Lumpur” has turned some heads – and churned some stomachs.
     Edley, dean of the law school at the University of California at Berkeley, has been using his position as co-chair of the education and curriculum working group for the UC Commission on the Future to advocate for an ambitious expansion of the system’s online arm that could eventually include fully-online bachelor's degree programs designed to rake in hundreds of millions of dollars.
     California is not the only state eyeing online education as a way to increase access and cut costs. But while many states are looking to use the popular medium to reach adult learners or save money at non-elite institutions, the University of California is a top-shelf research university that boasts one of the country's most competitive undergraduate programs. If the system does end up offering an online bachelor's degree, it would be a big step for online education.
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     Members of a union representing graduate student-instructors at UC, finding Edley’s plan for “squadrons” of teaching assistants serving on “the frontline of online contact” more than a little dystopic, showed up to a regents’ meeting in May wearing patches that read “Dean Edley = Class(room) Enemy.” Edley’s goals for online education at UC were primarily profit-driven, they argued in a statement, and would “undoubtedly end in the complete implosion of public higher education in the embattled state of California.” Some professors and media outlets have expressed similar concerns.
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     But some UC professors, like the graduate students' union, remain skeptical. The Berkeley Faculty Association — a group of about 300 professors — put out a report in May that did not condemn the pilot but voiced concerns about where Edley wants it to lead.
     The association was particularly unnerved by the idea of graduate student-instructors being the “frontline of contact” with online students, as Edley put it. For some, that sort of talk evokes a model many for-profit institutions have used to keep payroll expenses low and administrative control high: have full-time faculty put together the syllabus, then hire less-expensive adjuncts to deliver it. Faculty resistance to this sort of University of Phoenix-inspired arrangement was a major factor in last year’s implosion of the University of Illinois Global Campus, a similarly ambitious online effort….
     Wendy Brown, a political science professor at Berkeley who co-authored the Faculty Association report, told Inside Higher Ed that she has no qualms with a pilot going forward. What she worries about is the way Edley has been framing it as a first step toward something larger and perhaps more controversial. Inferring from Edley's idea of graduate student-instructors forming the "frontlines of contact" with online students, Brown says she worries the law dean's proposed cyber-campus would contribute to the displacement of full-time faculty members with adjuncts — a perennial concern among traditional faculty everywhere, given the decline of tenure and the popularity of the Phoenix model. “This is absolutely part of a larger set of proposals referred to by the Commission on the Future that describe the necessity of shrinking the letter-rank faculty and increasing part-time faculty,” says Brown….