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For-profit Higher Education
Fiat Chrysler Automobiles is the latest company to use tuition assistance for employees – which for decades has been a part of many businesses’ benefits packages – as part of a renewed effort to bring in and cultivate talent.
An Accenture subcontractor interfered with a security audit of an Education Department financial aid system that inspectors say showed signs of unauthorized access.
In recent years, for-profit colleges like FastTrain have faced increased scrutiny for their business models, which often involve aggressive or misleading recruitment, excessively high tuition, poor academics, low graduation rates, high loan-default rates, and deceptive or fraudulent reporting. But as the New York Times reported in October, even campuses flagged for noncompliance by the Department of Education or facing Justice Department investigations manage to exploit loopholes and reap millions in federal student aid.
Late payments on student loans have risen in recent years despite generous repayment options, lower joblessness, higher wages and an improving U.S. economy. Federal regulators have found evidence that some of the Federal Student Aid office's loan contractors have misled borrowers. State attorneys general and the federal Consumer Financial Protection Bureau have sued FSA-overseen schools for allegedly swindling students, conduct that FSA missed or ignored for years.
The administration earlier this month unveiled ambitious legislative proposals on accreditation, calling on Congress to give the Education Department the power to force accreditors to stop approving colleges where too few students graduate and many are unable to repay their loans. Since that plan faces long odds of going anywhere in the current Congress, though, much of the attention on accreditation in the coming months will focus on how the Obama administration enforces existing federal accreditation rules.
A 2012 Senate investigation of 30 for-profit schools (including eight charted below) found the companies spent 22 percent of all revenue on marketing, advertising, recruiting, and admissions staffing—and only 17 percent on instruction. In 2009, for-profit instructional spending averaged out to $2,050 per student, compared to $7,239 at public institutions and $15,321 at private nonprofits. Meanwhile, average for-profit CEO pay was $7.3 million.
The Department of Education announced Tuesday that it would expand its program to forgive federal student loan debt to thousands more students who attended programs of Corinthian Colleges, once one of the nation’s largest for-profit education companies.
The for-profit college operator Education Management Corporation will forgive loans to about 80,000 former students nationwide as part of an agreement with state attorneys general resulting from a multiyear investigation of the company’s aggressive recruitment practices.
Linda Stamato, co-director of the Center for Negotiation and Conflict Resolution and a faculty fellow Rutgers University, writes: As taxpayers bail out those scammed by Corinthian Colleges—the notorious poster child for for-profit college companies—and open the door to more loan forgiveness from for-profits, let us pause to thank the enablers in and out of Congress for their contributions to this fiasco. They ran interference to block regulations that would have protected students and taxpayers. Too bad they don't have to foot the bill.
The nation’s second-largest for-profit college operator, Education Management Corporation, is expected to agree to pay nearly $90 million to settle a case accusing it of compensating employees based on how many students they enrolled, encouraging hyperaggressive boiler room tactics to increase revenue.