Federal Lawsuit Accuses For-Profit Schools of Fraud (New York Times)
…Though they vary widely in quality, for-profit schools have drawn scrutiny in recent years for aggressive recruiting, high prices, low graduation rates and heavy borrowing by students who often have poor job prospects afterward. They have been a particular target of overhaul efforts by the Obama administration. Much of the attention has gone to a handful of large, visible national chains, like the University of Phoenix, DeVry University and Corinthian Colleges, that are publicly traded. But like Premier, which had 17,000 students in 2012, most are privately owned and receive far less scrutiny.
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Compared with traditional, nonprofit schools, both public and private, for-profit schools disproportionately enroll low-income and minority students who qualify for significant government aid, and the schools rely far more on that aid for revenue. Federal records show that in 2011-12, Premier collected $112 million in federal Pell grants and federal student loans. For-profit schools also spend heavily on advertising, their students are far more likely to borrow money to pay for tuition, and those who borrow rack up more debt and are more likely to default.
Students at for-profit schools often do not realize that cheaper alternatives exist through public community colleges and trade schools. A study published this month found that the majority of people who had attended for-profit colleges and trade schools did not understand the distinction, learned of their schools through advertising and did not consider any other schools....
