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Group Accuses Government Investigators of 'Malpractice' In Undercover Report On For-Profit Colleges

College Students

First Posted: 02/02/11 07:44 PM ET Updated: 05/25/11 07:30 PM ET

A lobbying group representing the for-profit college industry filed a lawsuit today accusing federal government investigators of "professional malpractice" after issuing a report last summer that documented aggressive and misleading recruitment at several for-profit institutions.

The undercover investigation by the Government Accountability Office, which involved four investigators posing as fictitious prospective students, found numerous examples of deceptive statements made by admissions officers and other employees at 15 for-profit colleges. The findings included overstated promises of potential salaries after graduation and high-pressure tactics that pressed applicants to enroll before receiving information about financial aid.

The for-profit college industry in recent months has seized on revisions made to the report in November - changes that in many cases represent technical tweaks and elaborations, but that the industry says have "cast serious doubt on the credibility and objectivity of the GAO's analysis."

The report garnered great attention when it was released last August, causing stock prices to plunge at many of the publicly-traded corporations that own for-profit schools. The for-profit college sector includes a diverse array of schools, ranging from specialized institutions such as ITT Technical Institute to mostly-online colleges such as the University of Phoenix and Kaplan University.

Chuck Young, a spokesman for the GAO said the revisions in no way undermine the overall message of the report, and that the agency stands by its findings. According to Young, an independent GAO review team examined the report after it was published and "found no material flaws in the evidentiary support for the overall message."

The lawsuit -- filed by the Coalition for Educational Success, represented by Washington lobbyist Lanny Davis -- is the latest example of an intense campaign the for-profit colleges are waging against new federal regulations that could restrict their access to lucrative federal student aid dollars. Industry groups have filed a flurry of lawsuits against the Department of Education and conducted an advertising blitz accusing the government of trying to prevent students from going to college.

Davis, a former special counsel to President Bill Clinton, began representing the for-profit college sector last year. He has faced criticism in recent years over his paid representation of controversial international figures, including Laurent Gbagbo, the Ivory Coast dictator who refused to step down after losing an election last year. Davis dropped Gbagbo as a client soon after taking him on in December, following complaints from human rights groups.

The for-profit college industry faces increased scrutiny as evidence mounts of its students leaving with debts they cannot afford to pay, given the low-wage jobs they tend to attain after graduation. For-profit schools enroll about 12 percent of students nationwide, yet the sector takes in nearly 25 percent of all student aid dollars and is responsible for 43 percent of student loan defaults.

A number of the alterations to the GAO report cited in the lawsuit involved wording changes and statements made by recruiters to the fictitious students that were omitted from the first report.

For example, in the original report, the GAO noted how a representative at a two-year college in California told the undercover applicant getting a job is a "piece of cake" and graduates of the computer drafting program could make more than $120,000 per year. The revised report added that the employee also said in the current economic environment, the job applicant could expect a job earning $15 per hour, if lucky.

However, during the same interview, the representative also encouraged the student to falsely fill out a federal student aid form in order to qualify for Pell Grants. There were no revisions to that conclusion.

In another case, the original report said a recruiter at a publicly-traded four-year college in Pennsylvania told an applicant she "should" take out the maximum in federal student loans, even if she didn't need all of the money for tuition. The revised version of the report changed the wording to "could."

The lawsuit names a series of other tweaks made to the report, suggesting that "pervasive and one-sided errors resulted from the intentional bias driving the investigation, in violation of the GAO's protocols."

GAO has not discounted any of the conclusions of its report, and the vast majority of the findings required no tweaks or revisions. Some of the more misleading statements included a recruiter in Washington, D.C., telling an applicant a barber can earn between $150,000 and $250,000 per year, even though the Bureau of Labor Statistics pegs 90 percent of barbers' salaries below $43,000 per year.

Another employee at a college in Florida sat coaching an undercover applicant while she took a proficiency test. The same recruiter implied a student did not have to pay back student loans, even though federal student aid is a debt that often cannot be discharged even in bankruptcy.

The lawsuit notes that the GAO's "malpractice and negligence" with the report forced the group to take on "substantial costs and expenses" to set the record straight.

The Coalition for Educational Success has been pursuing a separate lawsuit against the Department of Education over access to e-mail records discussing proposed industry regulations.

Another group representing the industry, the Association for Private Sector Colleges and Universities, filed a lawsuit last month against the Department of Education seeking to undo consumer protection regulations approved last fall. The disputed rules included guidelines meant to prevent misleading and deceptive pitches by recruiters and measures prohibiting bonuses awarded to recruiters based on the number of student enrollments they secure.

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