GAO: 15 for-profit colleges used deceptive recruiting tactics

By Daniel de Vise and Paul Kane
Washington Post Staff Writer
Thursday, August 5, 2010

Congressional officials on Wednesday identified 15 for-profit colleges where recruiters allegedly encouraged investigators posing as prospective students to commit fraud on financial aid applications or misled them about such matters as tuition costs and potential salaries after graduation.

The Government Accountability Office's findings, presented to a congressional committee along with grainy video clips captured by hidden cameras, may amplify federal scrutiny of the fastest-growing higher-education sector.

Many of the largest for-profit entities were named among the 15 sites targeted by GAO investigators: University of Phoenix, with more than 400,000 students; Argosy University, part of the 136,000-student Education Management Corp.; Kaplan College, part of the 119,000-student Kaplan Higher Education operation owned by The Washington Post Co.; and Everest College, part of the 110,000-student Corinthian Colleges.

Also named: Westech College in California, Bennett Career Institute and Potomac College in the District, MedVance Institute in Florida, College of Office Technology in Illinois, Anthem Institute in Pennsylvania, and Westwood College and ATI Career Training in Texas. Kaplan, Everest and Phoenix each were cited twice, for different campuses.

Four of the colleges -- Westech, MedVance, Anthem and Westwood -- "encouraged fraudulent practices" in meetings with undercover investigators, the report says. All 15 "made deceptive or otherwise questionable statements."

At a morning Senate hearing, some of the most powerful revelations came in a brief video presentation, spliced together from hidden-camera feeds.

Attendees watched as a MedVance admissions officer told an applicant he needn't worry about loading up student debt: "It's not like a car note -- if you don't pay it, they won't come after you."

A Texas admissions officer tells an applicant not to report his savings on a loan application: "They don't need to know how much cash you have."

And a Florida recruiter quips to a reluctant applicant, "What are you really afraid of?" and then rips up his application.

Leaders of industry giants Phoenix, Kaplan and Corinthian all announced internal investigations in response to the findings.

In a joint statement, Donald E. Graham, chairman and chief executive of The Washington Post Co., and Andrew S. Rosen, chairman and chief executive of Kaplan Inc., described the tactics revealed in the videotaped interviews as "sickening."

"They violate in every way the principles on which Kaplan is run," they said in a statement posted on The Washington Post Co.'s Web site. "The GAO and the Senate [Health, Education, Labor and Pensions Committee] have done us a favor. We will do everything in our power to eliminate such conduct from Kaplan's education institutions."

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