This week brought more bad news for the for-profit college sector — which is good news for former and future students of the often-abusive industry.
The attorneys general of 39 states, including Missouri and Kansas, announced a $102.8 million settlement with Education Management Corp., which operates schools under several names. The most familiar here is Brown Mackie Colleges.
About 1,500 students in Missouri and about 1,000 in Kansas will receive on average $1,000 to $1,200 in loan forgiveness.
Whistle blowers within the schools had said they were pressured to enroll students who had little chance of succeeding, and that their compensation was based on how many students they signed up, which violated a federal rule. The employees will share in the proceeds from the settlement.
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Chris Koster in Missouri and Derek Schmidt in Kansas served consumers well by participating in the legal action. Students who believe they were defrauded or deceived by a school should relay complaints to the attorney general’s office in their states.
Unfortunately, high-pressure sales tactics to lure students into schools of dubious value has been a business model of the for-profit college industry for decades. Thousands of students have burned through millions of dollars in loans and federal grants and received little but a worthless certificate.
Fortunately, market trends and regulatory pressure are combining to put some of the schools out of business.
Corinthian Colleges, a company enrolling tens of thousands of students across the nation, shut down and filed for bankruptcy this year while staggering from multiple charges of fraud.
And the U.S. Department of Defense suspended one of the largest chains, the University of Phoenix, from recruiting on military bases and accessing federal dollars available to service members for educational expenses.
Even students themselves are pushing back. Graduates of art schools operated by Education Management Corp. have traveled to recruiting events in multiple cities to warn prospective students to stay away, claiming the schools offer substandard courses and inadequate career assistance.
The U.S. Department of Education has the most resources to keep for-profit colleges in line, but has been lax about doing so. If the department would finally add its regulatory authority to the consumer protection actions brought by the attorneys general, the many bad actors could perhaps finally be weeded out of this industry.