Caught on Tape: College Dreams of Vulnerable Students Meet Deceptive Claims by For-Profit Colleges

In today’s tough economy, a college degree is surely a leg up in the workplace. Yet by focusing more on getting students in the door than getting them through with a degree, some colleges are saddling many of our most vulnerable students with unconscionable debt.

In a series of reports, Ed Trust has focused attention on four-year colleges and universities with unusually good—and unusually bad—success rates, especially for minority students.  But the problems we found among traditional public and private nonprofit colleges paled by comparison to problems in for-profit colleges brought to public attention recently in a series of Senate hearings.

On August 4, in testimony before a Senate committee, Government Accountability Office (GAO) officials shone a light on shady recruiting practices. GAO’s undercover probe of 15 for-profit colleges showed that all misled students about matters ranging from the cost of a degree to the salary they would earn after graduation.

In a ruse captured on video, admissions staff at one for-profit stonewalled when GAO investigators asked for details on financial aid. GAO documented this practice at five other for-profits. Such unscrupulous practices can leave the students who can least afford it yoked with debt they can never repay. Those who earn a bachelor’s at a for-profit carry a median debt of $31,190—compared with $7,960 for similar students at public institutions.

Ed Trust welcomes the spotlight on results in both nonprofit and for-profit higher education. But though problems exist in both sectors, we are especially worried about rampant deception on the for-profit side because these institutions serve lopsided numbers of low-income students and students of color. Among all first year college students, for example, more than one-quarter of black and Latino students are enrolled in for-profits, compared with only one in ten whites.

What’s more, upwards of 60 percent of students at for-profits receive Pell Grants, compared with 27 percent of all undergraduates. Indeed, several of the 15 for-profits in the GAO probe get close to 90 percent of their revenue from federal student aid. One of them, the University of Phoenix, last year became the first school to receive more than $1 billion in Pell Grants. It also had to pay the federal government $67.5 million to settle a suit alleging that it illegally paid its recruiters based on the number of students they enrolled.

With average tuition and fees double the cost of a four-year public institution and almost six times that of a public community college, it should be no surprise that nearly twice as many students at for-profits default on their college loans as those at public institutions.

Unlike some other organizations, we’re not opposed to folks making a profit when they provide a solid education to students who need it. And we know that some for-profit institutions do exactly that. But something is fishy in the industry as a whole—and a lot of vulnerable students are being harmed.