08/03/2010 06:00 pm ET Updated 6 days ago

College Students Encouraged To Lie For Financial Aid, Study Finds

Sparked by an increase in defaulting student loans, an undercover government investigation into for-profit colleges has found that campus recruiters used deceit and fraud to lure potential students.

The Government Accountability Office (GAO) will present its findings-- mostly outrageous anecdotes-- from its 30-page study, "For-Profit Colleges: Undercover Testing Finds Colleges Encouraged and Engaged in Deceptive and Questionable Marketing Practices," tomorrow morning at a Senate education hearing.


The GAO sent four undercover employees to pose as potential students at 15 unnamed colleges, chosen because each receives at least 89% of its revenue from federal aid. The "students" spoke to admissions officers and campus recruiters, and expressed interest on school websites.

The "students" quickly discovered all levels of shadiness: one D.C.-based admissions officer at a trade school claimed barbers can earn up to $250,000 a year, while a Florida-based campus recruiter tried to convince a student that a $14,000 massage therapy certificate was a "good value" even though the same certificate was available at a community college for $520.

Other schools urged applicants to falsify information on their financial aid forms. For instance, a Texas college encouraged a potential applicant to add dependents to qualify for a Pell Grant, while an adviser in Pennsylvania told another student to delete his $250,000 savings declaration.

Although none of the schools' names were disclosed, analysts interviewed by Businessweek speculated that two of the campuses are owned by Apollo Group, two by Corinthian Colleges and one by the Washington Post, which owns Kaplan, the educational-testing behemoth.

The damning report is the latest blow to the for-profit sector, which currently receives $24 billion of federal aid each year, the GAO reports. These schools include any privately owned certificate programs, associate's degrees, and bachelor's degrees.

In a final memorable anecdote, the report describes a Florida-based admissions officer who said student loans are nothing like car payments. And in fact, this is sort of true -- when students default on these loans, taxpayers end up bearing most of the costs.

READ the entire report here: