By John Lauerman
For-profit college recruiters pressured students to sign up for courses and lied about the cost of programs to boost enrollment, witnesses said at a U.S. Senate hearing Wednesday.
Government investigators posing as applicants were told by recruiters from for-profit colleges that students had to sign up for courses before they could get financial-aid information, and recruiters themselves were misled about the quality and cost of education companies' programs, according to the testimony at a Senate Health, Education, Labor and Pensions Committee hearing in Washington.
Schools cited in the study by the General Accounting office include branches of and Pittsburgh-based Education Management Corp.'s Argosy University; Phoenix-based Apollo Group Inc.'s University of Phoenix; the Washington Post Co.'s Kaplan College; and Santa Ana, Calif.-based Corinthian Colleges Inc.'s Everest College.
President Barack Obama proposed rules that would limit eligibility for financial aid and crack down on enrollment practices at for-profit colleges, which received $26.5 billion in U.S. loans and grants in 2009.
Rewarding top recruiters with money and perks is an invitation to mislead applicants, who frequently have no idea of the value of their degrees or how much debt they're accruing, said David Hawkins, director of policy and research for the National Association of College Admissions Counseling, based in Arlington, Va.
"The boiler-room style of recruitment has had real harmful consequences for students and taxpayers," said Mr. Hawkins before his scheduled testimony.
Jacquelyn P. Muller, the spokeswoman for Education Management in Pittsburgh, could not be reached for comment.
Joshua Pruyn, a former recruiter for Westwood College Online, a unit of closely held Alta Colleges Inc. in Denver, said the company offered him trips to Cancun, Mexico; paid time-off; and gift cards as incentives to sign up students. Recruiters who didn't get results were "harassed and threatened" by supervisors, he said in written testimony released before the hearing.
Mr. Pruyn said some of his fellow recruiters lied to or misled applicants about the cost of Westwood's $75,000 bachelor's degree program and told them a degree from Westwood would get them jobs that paid more than $100,000 a year.
Company officials also perpetuated false impressions about the educational programs and their costs, said Mr. Pruyn, who worked at the college for five months in 2007 and 2008. Recruiters were told that many graduates of a video-game design program were working in the industry, when none were, he said. Mr. Pruyn said company officials told him that a Westwood in-house financial-aid program provided loans to students at zero percent interest, when students were charged 12 percent after they left the college, he said.
"It was hidden from us; it was never revealed," he said in an interview before the hearing. "I realized that you couldn't work there and work ethically."
Changing the rules that allow colleges to pay recruiters on the basis of the number of students enrolled, a practice called incentive compensation, won't protect students and will lead to higher legal costs for companies, the Career College Association, a Washington-based industry group, said Tuesday in an e-mailed statement.
The current rules give schools guidance as to what kind of compensation they can provide, the group said.
Data collected by the Accrediting Commission of Career Schools & Colleges suggest that most for-profit colleges comply with recruitment guidelines that prohibit lying to applicants, said Michale McComis, executive of the group, which primarily accredits for-profit career colleges.
"Overall, I am proud of the commission's diligence in enforcing its recruitment, advertising and admissions standards," Mr. McComis said in his testimony. "And while I believe that the unacceptable and abhorrent activities presented for this hearing are not in evidence for an entire sector of the higher education community, I am aware that more vigilance among all accrediting agencies, with regard to all institutions is necessary."
A study by the Government Accountability Office that was formally released at the hearing said enrollment counselors at all 15 for-profit colleges that were investigated had lied or had misrepresented the nature of their programs to investigators posing as applicants. Employees at four of the colleges encouraged the investigators to make fraudulent statements on financial-aid applications to get government funds.
Mr. Hawkins's group, a nonprofit association of more than 12,000 college admissions counselors and high school advisers, recommends that all such employees should be paid a fixed salary, he said in his testimony.
Students are on the short end of an information gap where for-profit college recruiters have much more information, Mr. Hawkins said.
"In an unregulated environment, the potential for misrepresentation and outright fraud is a clear and present threat, which can result in harm to students and, in the case of federal aid and loans, to the taxpayer," Mr. Hawkins said.