For Profit Schools Under Investigation For Fraud

For Profit Schools Under Investigation For Fraud

The United States Government Accountability Office or rather the [GAO] has been issuing reports about For-Profit Colleges since 2009, when the office started investigating allegations that were being brought to light against the colleges for predatory recruiting tactics. In 2010, the [GAO] released a report about their findings of fifteen different For-Profit Colleges, with the main emphasis on the fact that found affirmation that the colleges were using deceptive sales practices to boost their enrollment of students who would bring in Federal Aid.

2010 GAO Report

The lack of education and value of the degrees students left for-profit colleges with, caught the attention of the United States Senate in 2010. The GAO opened an investigation into how the $24 Billion in federal funding was being spent.

During the enquiry, the [GAO] found that four out of the fifteen cases had campus officials, “encouraging applicants to commit fraud”, where the school officials would then “lie about or misrepresent their programs” as found during an undercover investigation by government officials. According to the GAO report, Westech College, MedVance Institute, Westwood College, and Anthem College all made, “deceptive or otherwise questionable statements”, during which they made fraudulent suggestions.

Other findings of the GAO Report:

  • Pressuring prospective students to enroll on the spot without considering costs or alternative education paths
  • Providing prospective students with knowingly false information including enrollment rates, student graduation rates, the nature of the school's accreditation, salary and employment prospects and duration and cost of the program itself
  • Encouraging students to submit false information to obtain federal funding to attend the college

These findings are even more startling given the student costs and outcomes:

  • 54% of students at for-profit colleges leave without a degree or certificate
  • The total cost for associate degrees and certifications at these for-profit colleges on average cost 4x as much as comparable degrees and certifications at community colleges
  • One in five students from for-profit colleges default on their loans within 3 years of beginning repayment

2012 Senate HELP Report

Soon after the 2010 GAO report, Tom Harkin's followed with the 2012 Senate HELP Report conducted over 2 years into the for-profit college industry. The report found:

  • 15 of the largest for-profit colleges received a staggering 86% of their revenue directly from federal aid programs
  • Only 17% of the budget at the 15 largest schools was spent on academic instruction with nearly 23% spent on recruitment. This is in gross contrast to not-for-profit schools which spent less than 1% of their budgets on marketing
  • The schools mislead, deceived and lied to service members about their military benefits, claiming their full education would be paid for

2014 Gainful Employment Regulations

The GAO Report and 2012 Senate HELP Report lead to a series of government lawsuits and actions against the for-profit colleges examined in the reports. In October 2014, the Department of Education attempted to correct many of the deceptive practices by instituting a set of standards called the Gainful Employment Regulations. This requires all schools to track the debt and employment of their graduates to ensure they are meeting federal guidelines.

This requires that a graduate is never left with a monthly loan payment higher than 20% of their discretionary income or 8% of their total earnings. The schools that do not adhere to this risk losing all federal funding.

Colleges are evaluated on a yearly basis and if the loan payments of their graduates exceeds 30% of discretionary income or 12% of earnings, are labeled as failing. If a for-profit college fails consecutively for 2 years, they are then ineligible for aid.

This has proven to significant for these schools as many are now attempting to move to the non-profit status to stay afloat.

2015 Students Before Profits Act

The Students Before Profits Act was introduced in September 2015 by Senators Elizabeth Warren of Massachusetts,  Chris Murphy of Connecticut, and Dick Durbin of Illinois. The goal of the bill is to protect students from the school's deceptive practices and lack of emphasis on academic education. This is done by:

  • Ensuring students have access to accurate information
  • Increasing civil penalties on institutions and executive officers found guilty of misrepresenting the cost of the college, graduation rates, employment statistics or default rates
  • Strengthening regulation and oversight, specifically on oversight of default rate manipulations

A significant part of the bill is that executives and owners of these for-profit colleges are now responsible for financial losses associated with Title IV funds. The Department of Education is able to investigate claims against groups upon discharge of borrowers' student loans.

For-Profit Schools Sanctioned by the Government

The schools below have either been shut down due to their misleading and deceptive practices or were part of the GAO 2010 investigation. Although there is a common thread among for-profit colleges over stating employment rates, graduation rates and understating tuition and debt costs, we have outlined the issues facing each individual school below.

American InterContinental University and Colorado Technical University Student Loan Forgiveness 

Career Education Corporation is the parent company of AIU and CTU. CEC was found by the GAO to have deceptive recruiting tactics, misrepresentation of job placement rates, and high rates of student loan default and student withdrawal.

Both colleges have since shut down following the August 2013 settlement with the New York Attorney General in the amount of $10.25 Million. American InterContinental University loan forgiveness and Colorado Technical University loan forgiveness are now available due to the misleading practices and inflated job placement statistics.

American Military University/American Public University Student Loan Forgiveness

These two schools were not found to be at fault after the GAO investigation. However, graduates of both schools are eligible for assistance with their student loans.

American Military University loan forgiveness and American Public University loan forgiveness are currently taking applicants. If you attended either school, inquire with us today.

Anthem College Student Loan Forgiveness

Anthem College filed for Chapter 11 and shut their doors in 2014 due to their graduates being unable to find employment opportunities to pay for their high debt loads. Due to these findings, former students and graduates are now eligible for student loan forgiveness and student loan discharge.

Antonelli Student Loan Forgiveness 

In 2016 Antonelli college was stripped of its accreditation for their Practical Nursing program, one of their most popular. If you were enrolled in their Nursing program, or any another programs at the college, you may be eligible for Antonelli student loan forgiveness or student loan discharge.

Argosy University Student Loan Forgiveness

Argosy University, a brand of Education Management Corporation, was found to have questionable financial aid practices and high withdrawal rates. The parent corporation was forced to pay $3.3 Million in restitution and fines for deceptive marketing practices. More information on Argosy University student loan forgiveness or student loan discharge available here.

Ashford University Student Loan Forgiveness

The GAO found Ashford University had questionable recruiting practices, low spending on academic instruction and no job placement services. The parent company, Bridgeport Education, was forced to pay $7.25 Million in 2014 to settle claims that they lied or mislead Iowa students to coerce them into enrolling into online courses. They are still under investigation by numerous state attorney general's at this time.

If you attended Ashford, you may be eligible for Ashford University student loan forgiveness or student loan discharge.

Briarcliffe College Student Loan Forgiveness

Briarcliffe College has been in how water with the Department of Education for some time and recently announced it has closed enrollment to new students and will be closing it's doors for good in 2018. Many students are now scrambling to figure out what to do with their degree from a soon to be closed school and how to manage their debt.

Graduates and past students may be entitled to Briarcliffe College student loan forgiveness and student loan discharge. It is advised that you call now for more information.

Brooks College Student Loan Forgiveness 

Brooks college was forced to close its doors for good due to its unethical and misleading practices documented over many years. To assist with the high student debt amounts graduates and former students were left with, for a limited time, Brooks College student loan forgiveness is being offered along with Brooks College student loan discharge.

Brown Mackie Student Loan Forgiveness

Another for-profit college that has been forced to close its doors due to their unethical practices is Brown Mackie College and its Institutions. If you were made promises by the school that weren't kept, you may be entitled to Brown Mackie Student Loan Forgiveness or student loan discharge.

Capella University Student Loan Forgiveness

Capella University has was found to have extremely high withdrawal rate, spending an unusually high percentage of it's annual budget on marketing and not returning funds granted on behalf of their students who withdrew from their classes.

If you were enrolled at the college, you may be eligible for Capella University loan forgiveness or loan discharge.

Career Point Student Loan Forgiveness 

Career Point College has shut its doors completely due to decreasing enrollment and misleading practices to get potential students to enroll. Many people are left scrambling with debt from the school and few answered. If you attended Career Point at any time, you may be entitled to Career Point student loan forgiveness, or Career Point student loan discharge.

Carrington College Student Loan Forgiveness

Carrington College often promises to be the starting point for health care careers however, most of the graduates see it as the starting point for high student loan debt and monthly payments upon graduation. For those that have attended the school at any time you may be eligible for Carrington College student loan forgiveness or loan discharge.

Chancellor University Student Loan Forgiveness

Although, the GAO report found that Chancellor University spent an above-average amount per student on instruction it closed its doors in August 2013. Due to this, you may not need to pay back all your loans from the university. Find out today if you qualify for Chancellor University student loan forgiveness

Collins College Student Loan Forgiveness 

Collins College is another for-profit school that has closed its doors after the GAO report and industry-wide investigation. There are now programs in place to assist the graduates and attendees with Collins College student loan forgiveness.

Everest College Student Loan Forgiveness

Everest College was a brand of Corinthian Colleges, Inc which had one of the highest withdrawal rates of all, this lead to a Chapter 11 filing and closing its doors in May 2015 leaving many students .

Globe University & Minnesota School of Business College Student Loan Forgiveness

These two schools permanently closed their doors after filing for bankruptcy. This is a common theme we are seeing amongst many of these colleges which leaves their graduates and attendees confused and concerned about their loans. However, they may be able to get assistance through Globe University student loan forgiveness.

Grand Canyon University Student Loan Forgiveness 

This private, for-profit, Christian University has been in hot water for many years now due to it's job placement promises and failure to deliver on it's guarantee of job training. This is why programs are in place to help graduates and attendees, namely Grand Canyon University student loan forgiveness and student loan discharge.

Harrington Student Loan Forgiveness 

A newer school that has announced it's decision to close it's doors is Harrington College. Qualify for Harrington College student loan forgiveness today.

Henley-Putnam University Student Loan Forgiveness

Henley-Putnam was found to employ seven recruiters, four staff members for student services and not a single person for career services.

ITT Technical Institute Student Loan Forgiveness

ITT Technical Institute announced it was closing in September 2016. This was a shock for many, especially the thousands who once attended the college. ITT Technical Institute loan forgiveness is now available.

Kaplan University Student Loan Forgiveness

There are various complaints from those who attended Kaplan University and many for good reason. This is why those who went to the school for any duration may now be eligible for Kaplan University student loan forgiveness or student loan discharge.

University of Phoenix Student Loan Forgiveness

The University of Phoenix has managed to stay afloat despite the numerous investigations and complaints from it's past students. However, all hope is not lost for those who did not receive what they believed they were paying for. Now available, University of Phoenix student loan forgiveness and student loan discharge.

Westwood College Student Loan Forgiveness

Westwood College closed it's doors in 2016 due to the investigations into the schools practices. Those who attended Westwood and graduated from the school may be entitled to Westwood College student loan forgiveness.

Next Steps

The majority of for-profit colleges provided false information about their accreditation, graduation rates, prospective job opportunities and associated salaries, as well as the duration and cost of the programs. All of the schools also used hard sell and marketing tactics in order to enroll students, even if they were under-qualified.

If you feel you were defrauded by the school you attended or you are being treated poorly as a distressed borrower by your creditors, contact StudentLoanFAQ's and speak to one of our advisors about student loan forgiveness. You may qualify to consolidate or even wipe out your remaining student loans.

2 replies
  1. Nancy Shannon Robertson
    Nancy Shannon Robertson says:

    I have been defrauded by the University of Phoenix. In March 2007, I was led to believe I was taking online classes with a grant. I later found out that I have a huge loan. I told the recruiting counselor many times that did I not want a loan, and that there was no way I could take classes if I did not have a grant. I was divorced in 2005 and I had a large credit card bill as of yet I also didn’t have a job. What I did have was 55 hrs of college from my local community college. I only needed a few hours for an associate degree… but I also had to look for work now that I was divorced. Eric Young omitted certain facts to correct a misconception about me getting a grant for my education and thus my nightmare began.

    Below is a portion of a letter written and sent on June 3, 2008 to Douglas Beckwith, PhD, JD, Dean and Executive Director of the Axia College of the University of Phoenix and The Student Loan Corp to complain about how Eric Young led me to believe I was getting a grant, not a loan, for my classes.
    The same letters went out to the Office of Attorney General Consumer Complaints.

    In 2012 and 2013 I also sent letters asking for help to Baron and Budd, PC, Elsey and Elsey, Attorneys at Law, Nicole Thidbault, PLLC, R Brandon Moore, PLLC, Stueve Siegel, LLP, and Wigington and Dankesreiter, LLP. I received no replies. It appears I am just a no body who trusted this college. But I have done extensive research online for years and there have been many people defrauded by colleges. There have been many class action lawsuits, I just did not hear about them until it was too late.

    Below the letter:

    To Whom It May Concern:
    I am writing to dispute the entire amount of the above account number, connected with the University of Phoenix, which was acquired in the year of 2007. The reasons for this will be explained below:
    After receiving emails from the University of Phoenix, an enrollment counselor eventually contacted me; his name will be provided upon request. This counselor discussed my options of continuing my education and about how many hours I had from a local college that would transfer over. He told me he thought I would probably only need about four classes. (This later turned out to be seven!)
    I told him that the only way I could take classes through U of P was with a grant. I explained to him that I already had a large amount on a credit card and I didn’t want another large bill.
    His words were, “I understand.”
    After listening to me explain further about my problems finding employment, as well as my divorce in 2005, he explained to me that I should have no trouble getting a grant, mainly because I haven’t been employed. He explained to me how I would better myself and have a better chance of finding employment with a degree.
    During the process of filling out the paperwork, information about loans was requested. I questioned him about this and wanted to know why is the U of P asking information about a loan if I am applying for a grant?
    His words were something like this; “You more than likely won’t get a grant if you don’t fill out the loan information.” As he kept talking, I was led to believe that I would not even be considered for a grant to take classes if I didn’t fill out these loan papers.
    Again I reminded him that I already had a large amount on a credit card and I didn’t want another large bill. I didn’t want a loan. I wanted a grant.
    As we continued to talk, and as he was going over my start date, he told me he wasn’t sure if I would even get the grant in time to start the classes that they had scheduled me to start.
    I said well then, I guess I won’t start classes because unless I had a grant, I could not take classes. Again I reminded him that I didn’t want a big bill, and I always repeated the amount of my bill that I already had and that I didn’t want another big bill.
    He kept saying he understood.
    The day classes started he called and told me he had exciting news. He said my “grant’ came through.
    No mention of any loan.
    No mention of the amount classes would be and that some of it would have to be a loan.
    As time went on – – and after I found out that I had to take more than four classes, I received a check in the mail. I had a friend at the time that had experience in receiving grants and she told me that sometimes they give you extra money to live on while taking classes. And we thought that what this was because surely the University gets their money first.
    I thought to myself …okay…
    I soon found out, as my degree plan was coming to an end, that I not only had a grant, but I also had a huge loan.
    I was devastated!
    No one in their right mind, especially a female, age 50, with the economy the way it is and jobs for even the youngest graduating very scarce, with a two year college six miles down the road, and a four-year college 30 miles up the road, would considered paying $7,000 to $9, 000 for four to seven classes!
    No one would!
    I surely would have not!
    I was lead to believe I had a GRANT!!!!
    If I had known about this loan, you can bet “your” bottom dollar that I would have said, “Thanks, but NO THANKS!”…

    I ended the above letter indicating that I would be paying a very small payment under duress monthly in the attempt to not damage my credit, but that I in no way was agreeing that I owed this amount. This letter of complaint was sent with every $5.00 payment I made.

    They contacted me a few months after sending this payment amount and said they would give me a year, I guess to make more money, but my part time salary approximately $800/month stayed the same from 2007 until the end of April 2015. I then found a job for $1600 /month for 15 months ending in August 2016. Due to a death in the family I had to move where now there are not many jobs, small town and the drive to the other job was long and through big city traffic. That and having a bully in the office I made the choice to find work elsewhere. I ended up having to go back to working part time for two companies, but I make even less than the other part time job. I substitute in a school a few days a month and I also work part time for audio/video Home Theater installation company that is a family business and only needs me a few hours a month.

    This was a scam done to me no doubt it. I was not advised about any loan amount. I was not advised or given a choice of any cost of my education. Not one time after any of my comments that I did not want a loan did Eric Young, the enrollment counselor advise me that “no one takes classes on just a grant at our college, you see we make most our money off student loans”. He did not say that. But what he saw and what he was trained to see was a person done on their luck, an older woman at that, use a befriending tone and understanding to real them in. I was 50 years old when this happened. I am 60 now. The money I spent for my 55 hours at the two-year college was a drop in a bucket compared to those 7 expensive Phoenix hours which did nothing to help me. What it has done is affected my health. The actions of this college was a money making scam!

    I still want to sue the University of Phoenix for misrepresenting this loan as a full tuition grant.

  2. Rose Nichols
    Rose Nichols says:

    Medvance institute in palm springs fl was closed due to deceptive practices and for profit. Some students retained a lawyer and won. I missed the deadline. What to do??


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