For-Profit Follow-Up

Last week I mentioned the recurring news stories about for-profit educational companies – many of which call themselves “colleges” or “universities” despite not being accredited or able to grant any college credit or confer any degree – landing in hot water for a variety of reasons. A few days after that a story surfaced about the next round of those investigations going forward in Massachusetts, and I thought I’d point it out to you, just in case anyone missed it the last time this happened. You can pick up the original story here if you want to, but the basic story is the same one: the state is investigating the Apollo Group, which owns University of Phoenix, the Washington Post Company, which owns the Kaplan Career Center in Boston, and Corinthian Colleges, which owns the Everest Institute campuses in Massachusetts, for suspected unfair or deceptive tactics in recruiting students and having them sign up for financial aid…

The basic idea is simple enough: the for-profit schools run advertisements extolling the virtues of their curriculum and boasting about the quality jobs that an applicant will be able to get once they complete the program. People sign up for these “colleges” and are given student loan applications to sign; the “schools” then take the money and provide worthless training classes that do nothing to make the student more employable. At the end of the program, the “student” is just as unemployable as ever, and is now also tens of thousands of dollars in debt, while the for-profit “school” walks off with the money. In extreme cases, the “schools” don’t even both to provide a full set of classes; they just tell the “students” that they have flunked out of the program and keep the remaining student loan funds. It’s simple, outrageous, and up until now does not appear to have been illegal; these companies could probably have continued doing business indefinitely if they hadn’t attempted to defraud the state Federal student loan systems…

What makes the situation fantastical to me, at least, is that for the most part these for-profit schools did not have to resort to fraud in the first place. At least some of these for-profit university classes are taught by real teachers and offer training that, while probably not up to the standards of an accredited university, are at least of some use. All these companies needed to do was say that upfront, and they could have continued harvesting a good living out of the gullible, the desperate, and the credulous. Instead, they appear to have given into greed and crossed that line; with investigations now running in Massachusetts, Florida, and Arizona, it’s only a matter of time before more states (and possibly the Federal government as well) start chiming in. The best of these companies – or, at least, those ones playing it closest to the rules – might survive the resulting firestorm, particularly if they abandon anything questionable and keep their heads down, but the companies that are basically a scam with school books probably won’t…

I tell you all this not because I think that any of my readers (assuming I have readers) are likely to fall for a scam like this, or likely to start a scam college of their own, for that matter, but rather because it’s an excellent example of somebody pushing things too far – and eventually falling victim to their own greed. Most of these companies began as legitimate training organizations, with no intention of ever trying to defraud the state, the Federal government, or their customers – but that’s how they ended up. It’s something to keep in mind the next time you’re wondering if you can get away with something that’s ethically questionable, just this one time – because down that path lies madness, and the possibility of becoming even more foolish than the fools you are defrauding…