For-Profit College Group Sues Over Regulations

A group representing for-profit colleges and trade schools filed a federal lawsuit Friday against the U.S. Department of Education seeking to block new regulations of the sector.

For-profit colleges, which rely heavily on students receiving federal aid, have been criticized for leaving too many students with large debt and questionable job prospects.

The lawsuit from the Association of Private Sector Colleges and Universities, filed in the U.S. District Court for the District of Columbia, challenges new rules issued in October that are scheduled to go into effect July 31.

At issue are regulations that prohibit paying recruiters based on how many students they enroll, seek to rein in deceptive advertising and require states to authorize colleges for students to be eligible to receive federal loans.

The group argues the regulations go behind "lawful regulatory efforts." The lawsuit seeks a voluntary withdrawal of the new regulations or a preliminary injunction to block them.

An Education Department spokesman said Friday the department is confident the published regulations "will do the best job of protecting students and taxpayers."

Comments

[J0E1]

11:04 AM on 01/24/2011

At issue are regulations that prohibit paying recruiters based on how many students they enroll, seek to rein in deceptive advertising and require states to authorize colleges for students to be eligible to receive federal loans. All very reasonable rules that only scam artists would be against.

[Cynth Bage]

01:52 AM on 02/04/2011

And we all know what find and upstanding folks work for the U--------y of P-----x and K----n U--------y. (Names redacted, but like I have to spell it out for you anyway.)

[DrSnuggles]

10:42 AM on 01/24/2011

Good. For profit colleges are damaging the country economically, because of the 'for-profit' model that is effecting the most vulnerable among us to debt, and more importantly educationally, in many ways the quality of a degree from a particular country is valued as the average for that country - as compared to the world we are dropping like a stone in prestige because of these dolled-up diploma mills.

However, I think the regulations are in the wrong places. How are these schools getting accreditted in the first place?

[Cynth Bage]

01:52 AM on 02/04/2011

Barely.

[bllnsinchnge]

09:20 AM on 01/24/2011

Tuition rates are rising much higher than inflation. Why? Not because of a lack of regulation, it is because of an excess of cheap credit via student loans. Similar to rising home values due to excess cheap credit, tuitions (college degrees) have an excess of cheap loans driving up prices. This also causes the B.A.'s to be worth less in salary as their supply is inflated. Oversupply will decrease prices (demand).

[MG Metiva]

03:25 PM on 01/23/2011

The greedy suing to get their way. No suprise here!

[Cynth Bage]

01:54 AM on 02/04/2011

Oh, but tort reform is only so the poor cannot sue the wealthy. The wealthy can sue to their black little heart's content.

[mburgh]

02:56 PM on 01/23/2011

Ah, our legal system at work. Exploiters, liars & charlatans step to the bar for justice. Poor, illeducated, deceived, step to window to sign up for debt. I know what I'm saying because I once taught for an online for profit college.

[dragonlady620]

12:57 PM on 01/23/2011

If these "private institutions" are taking public money then they should expect to be regulated. Period.
It their existence is dependent on that public money, then how can they claim to be "private?"
It sounds to me a lot like the banks' bailout whine: They wanted a ton of public money for recovery (from their own f*ckups but that's another story) but thought they should get it without conditions.
As far as I'm concerned they can't have it both ways. If theses colleges want to be unfettered by any public regulation, they should be prepared to do it on their own dime.

[FreedomCorpse]

08:33 AM on 01/23/2011

Perhaps the concept of earning a 'art degree' or similar 'degree' from a for-profit fly-by-night "college" or other 'college' that pop up like mushrooms in a dark cave leaving a student with $30k in taxpayer funded debt load and no possibilities of getting a livable wage job based on such a 'degree' should be heavily regulated.

[mburgh]

02:58 PM on 01/23/2011

An Art degree? Try promising degrees in engineering, nursing, IT and other fields that promise some kind of promise of employment. Get real. Crap on knowledge and culture if you will, but don't divert the real issue of promise specialized technical expertise to those who can barely read and have no mathematical skills.

[FreedomCorpse]

11:56 PM on 01/23/2011

that's precisely my point about 'art' degrees, useless for making a living. I have an engineering degree (EE) but have seen many jobs in my profession leave for slave wage labor countries.

[GreenKate]

06:45 PM on 01/22/2011

I'm enrolled in a private college and had this experience:

I had a night class that started at 6:00. In week 3, I had an unexpected schedule change at work which made getting there by six nearly impossible. So I asked to switch to the online section (having already checked with the prof, who was teaching both & it was fine with him). Registrar said yes but you have to pay the tuition again, that is our policy. The tuition was $2,500- overpriced enough without being doubled. Therefore I had to stay in the night class and ended up missing a bunch of classes due to work. I learned less and got a worse grade.

What aspect of such a policy is not a shameless rip off?

[holierdandao]

09:25 PM on 01/22/2011

Are you sure it was a "private college"? Schools such as Harvard, Northwestern, Notre Dame and Duke are private, but they are non-profit institutions. Schools such as ITT Tech, University of Phoenix and Kaplan are for-profits; big difference. I think you meant for-profit.

[GreenKate]

10:52 PM on 01/22/2011

Sorry, yes, thanks for the correction.

[6p023E23]

06:22 PM on 01/22/2011

you mean to say Yale and Harvard are NOT for-profit colleges?
then how come they have the biggest bank balance and endowment ever?

[mburgh]

03:00 PM on 01/23/2011

Your irony misses: endowments fund colleges, not create profit. The come form donations. Learn the facts and stop promulgating nonsense.

[Demarcus Jackson]

02:04 PM on 01/22/2011

I think they should fight back and stand up more against unfair regulations. I got my Masters education at an online regionally-accredited for-profit school and I would hold my rigorous education up against any one's public/private non-profit education---any day and any time of the week. I am currently pursuing my Doctorate at another regionally accredited online for-profit school. I got my Associates and Bachelors at brick-and-mortar schools, and so I like to believe I have received the best of both worlds. I am a professor who was hired for, among other things, my experience with online education. I have created two online courses at the college where I work and am in line to receive promotion soon and I am on tenure track. While I acknowledge some abuses in the system, for-profit colleges should not be scapegoated as the only ones guilty of these abuses. How many abuses take place in public/private non-profit colleges on a near daily basis? Moreover, not all for-profit colleges are guilty of such abuses. They should sue.

[GreenKate]

06:16 PM on 01/22/2011

It sounds like you are defending online education which is not at issue. My education experience is similar to yours, having a BA from a public university and now pursuing a MS from a private college. The ONLY reason I'm attending this private school is that my boss requires it and he's footing the bill. It is overpriced and the quality far lower than at my low cost alma mater.

Here is another case: a friend was interested in becoming a vet tech. Our community college has one of the top rated programs in the US, at a cost of about $1,200 for the 2 year program which also gets you an Associates Degree. She also checked into a competing private program in town: $35,000. And for that you do not even get a degree, only preparation to take the state exam. But guess which of the two schools runs tons of ads and has 6 campuses?
The $35,000 program. 35K is a lot for a career that pays $15 per hour, if you pass the exam.

[Demarcus Jackson]

06:44 PM on 01/22/2011

This issue is in fact about defending online schools. I can make the exact same overprice, low quality argument for many traditional colleges. These regulations unfairly target for-profit schools when ALL schools for-profit or otherwise need to undergo inspection and commonsense oversight.

[b f n]

09:21 AM on 01/23/2011

I'm sorry, but you seem to finish by saying that public (ie-taxpayer owned) schools are pulling the same stunt as for-profits--setting up shop to turn taxpayer-backed student loans into massive profits, and doing it without risk because naive students are the ones taking on all the debt?

By the way, I hope you realize the the accrediting agency 'backing' the school that gave you your masters was most likely owned by the school (or a larger corporate entity which owns both school and agency)? It's also true for wherever you are now, and chances are they're doing the same bang-up job Arthur Anderson did when they took on oversight of Arthur Anderson.

[Cynth Bage]

02:03 AM on 02/04/2011

Is that the same Arthur Anderson firm that fully backed their audits of the disaster known as WorldCom? I learned all about that...through my first online class at the non-profit university where I am currently studying.

[Andy Clark]

01:46 PM on 01/22/2011

I have heard some of the recruiter stories, and everything Vegetablelollipop said below me is true. These people are crooks and should be shut down completely.

[vegetablelollipop]

10:23 AM on 01/22/2011

If you have a Phoenix degree that looks bad on paper and can't get you a job and then you are saddled with huge debt that you took out in loans to pay for your worthless degree, then you have rightly been wronged by the for-profit school.

For-profit schools routinely keep a student's tuition payments even after that cancel within the mandatory refund period; or, worse still, they bill the student in error and even send the student to collections, putting her or him into further debt.

And there's more:

* Undercover applicant was falsely told that the college was accredited
by the same organization that accredits Harvard and the University
of Florida.
* Admissions representative said that barbers can earn up to
$150,000 to $250,000 a year, an exceptional figure for the industry.
The Bureau of Labor Statistics reports that 90 percent of barbers
make less than $43,000 a year.
* Admission representative told an undercover applicant that student
loans were not like a car payment and that no one would “come
after” the applicant if she did not pay back her loans.
* Admissions or financial aid representatives at all 15 for-profit colleges
provided our undercover applicants with deceptive or otherwise
questionable statements. These deceptive and questionable statements
included information about the college’s accreditation, graduation rates
and its student’s prospective employment and salary qualifications,
duration and cost of the program, or financial aid. Representatives at
schools also employed hard-sell sales and marketing techniques to
encourage students to enroll.

[J0E1]

11:12 AM on 01/24/2011

My fiance was a recruiter and HR rep for a hospital.  She had to field calls every day from applicants who were specifically told their for-profit degree qualified them for a job at her particular hospital and inform them that in fact, their degree was worthless and not accepted by their hospital or any other hospital she knew of in the region.  The smarter applicants are the ones that call her first before enrolling.  She would tell them how smart it was for them to call first and that they should not waste their money on a program that won't get them a job in the field they are promised.

[vegetablelollipop]

12:21 PM on 01/24/2011

Totally fanned and faved. Oh, it's such a shame to dash students hopes, dreams, and goals like this. It breaks my heart. My first degree was a paralegal degree from a fly-by-nighter and I know how rough this madness is.

[bllnsinchnge]

09:27 AM on 01/22/2011

Students should pay cash for their first 2 years. Easy credit has proven to cause inflated prices, inefficiencies and imbalances. The very regulations imposed were needed because of government guarantees in the market. Take away the disease, no symptoms to regulate.

[OmegaHunter]

03:31 AM on 01/24/2011

So in your world the problem is that people can get a loan to get a better education and not that these schools defraud the government?

[bllnsinchnge]

09:08 AM on 01/24/2011

The price is too high for school because of easy government loans. The schools raise the price and the government raises loan amounts infinitely. (sounds like a housing market bubble) The customer (student) needs to be able to comparison shop for value and influence the price of education. The problem is not loans, it is government loans with no collateral or limit.

[J0E1]

11:13 AM on 01/24/2011

If students took your advice, these schools would all go under.  Sounds like a plan!

[tucsoncindy]

02:57 AM on 01/22/2011

For profit colleges need to be regulated. It's a business corporation in the
business of education.

[Andy Clark]

01:44 PM on 01/22/2011

and in business, all the ycare about is your cash going into their pockets.

[6p023E23]

06:21 PM on 01/22/2011

Donot go to that college..students have a choice. don't they?

[mburgh]

03:04 PM on 01/23/2011

In order to have a choice, a student has to be informed. Online colleges offer something for nothing.

[Christy Sargent Anderson]

09:47 PM on 01/21/2011

I wish the government would regualate something for a change! They don't regulate the oil companies too much anymore, and they sure as socks don't regulate the banksters.

[Andy Clark]

01:44 PM on 01/22/2011

well said.

[kbauman]

06:01 PM on 01/23/2011

Except that even if the regulations pass, they won't be enforced until 2012.