A for-profit college coalition co-chaired by a Chicago private-equity executive is suing the U.S. Department of Education over an August report that accused the fast-growing industry of deception and questionable marketing practices.
The Dec. 9 lawsuit stems from the coalition’s failed efforts to gain access to documents, notes and videotapes the U.S. Government Accountability Office referred to in concluding all 15 for-profit colleges visited by undercover student applicants engaged in deceptive practices, including encouraging applicants to falsify their financial aid forms to qualify for federal aid.
On Nov. 30, the GAO reissued its 27-page report “to clarify and add more precise wording.” The revisions generally made the colleges look better. But the GAO said it stands by its findings. The Department of Education declined to comment about the suit.
The Coalition for Educational Success, whose members include career colleges, maintains in its suit that the report is being used by critics of career colleges to tarnish the reputation of all for-profit schools and to advance the Obama administration’s effort to push what are called “gainful employment” rules. The rules essentially tie for-profit schools’ access to federal student aid to their graduates’ ability to repay their student debt.
Sen. Tom Harkin, D-Iowa, a critic of for-profit colleges, said at a Senate education committee hearing that federal financial aid to students at for-profit colleges has ballooned to more than $23 billion a year from $4.6 billion a decade ago.
The GAO contends that students who attend for-profit colleges are more likely to default on federal student loans than students from other colleges. Over the past decade, for-profit college enrollment has risen to more than 2 million students from 600,000, Harkin said.
But for-profit college advocates say default rates are mostly related to students’ socioeconomic status, not the type of school. Colleges that serve more minority students have lower loan repayment rates, one study found. The average loan repayment rate is 30 percent at colleges with more than two-thirds minority enrollment, compared with 62 percent at colleges where less than a tenth of students are minorities, according to a September report by FinAid.org, an online resource about student financial aid.
