For-Profit Colleges Balk at New Rules

Uncle Sam’s new rules are putting a stop to for-profit college abuses, but the schools won’t go down without a fight.

The federal government has been shoving “for-profit” colleges around pretty forcefully in 2010. But some private schools are saying "enough is enough." Could heavier lobbying by such institutions change the student lending landscape, and what will that mean to college-bound Americans?

The issue stems from recent stipulations from the White House dictating what for-profit higher educational institutions can and cannot do when financing student educations. Loosely defined, for-profit colleges are educational institutions run by private, profit-seeking companies or organizations.

The industry has been in hot water due to charges brought on by the U.S. Department of Education. In August, a federal government investigation of 15 for-profit schools uncovered four cases of school officials misrepresenting the programs offered by the schools.

The probe found abuses at schools in California, Florida, Pennsylvania and Texas, including the following, as disclosed by USA Today on Aug. 4:

  • An applicant to a certificate program in California was encouraged to add more dependents in the Free Application for Federal Student Aid, or FAFSA, in order to qualify for Pell Grants.
  • College representatives in Florida, Pennsylvania and Texas suggested undercover applicants not report $250,000 in savings on the FAFSA.
  • One investigator received more than 180 phone calls in a month after registering on a website linking students to for-profit colleges.
  • A representative at a college in Florida told an applicant the school was accredited by the same organization that accredits Harvard and the University of Florida — not true.
  • Representatives from 13 colleges provided inaccurate or incomplete information about graduation rates, guaranteed applicants jobs upon graduation or exaggerated likely earnings.
  • Fourteen colleges had programs that cost more than comparable offerings at the nearest public college.
  • Six colleges told applicants they could not get information on financial aid eligibility until they completed enrollment forms in which they agreed to become a student and paid a small application fee.

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