fraud and deception in “private” education

• In a lengthy article published in The New York Times on November 9, Tamar Lewin discusses various criticisms and complaints that have recently been made against private colleges and universities in the United States—and also reports on the action that is being taken in response by the government and in the courts. The title of the article is “Scrutiny Takes Toll on For-Profit College Company.”

• What is perhaps most important and interesting is the background information the article contains. It shows that in the American education system the distinction between public services and private business is not clear. The for-profit universities and colleges discussed are definitely private in that their main purpose is to make money for their owners. However, the article makes it clear that the financing of these institutions is not private. Tamar Lewin states that all the large private institutions “get most of their revenue from federal student aid.” For example, the Kaplan schools on which the article focuses get 91% of their revenue from various government sources.

• Apparently most of the money that the schools get from the government comes to them indirectly. Students get loans from the government and use the money to pay their fees. However, according to Tamar Lewin, at Kaplan Higher Education, only about 28% of the students actually repay what they borrow; and even at the largest for-profit institution in the country, the University of Phoenix, only 44% are repaying. All this indicates that the American government is paying more than half the educational costs of students in for-profit schools. At the same time, the owners of these schools are making a lot of money as a result of this government support: in the three-month period before the article was published the profits of Kaplan Higher Education rose by 9% and the profits of the Washington Post newspaper which owns Kaplan more than tripled.

• Because their main concern is to make money, the for-profit schools want as many students as they can get. According to their critics, in order to get more students the schools often resort to unscrupulous recruitment practices. For example, they sometimes promise students that they will be able to find well-paid jobs when they finish their course even though they know this is not so. They also are accused of taking students who are not really qualified for the programs they enter. And in some cases they have apparently told students that they will not have to repay their loans at all. (Since so many students are not repaying their loans, there seems to be some truth in this claim. It has to be remembered, however, that if they don’t repay, they will be permanently in debt and that this will have a damaging effect on their lives.)

• Tamar Lewin gives interesting examples of the ways the dishonest practices of for-profit schools affect the lives of their students and she also give details about some quite surprising cases of outright fraud. As an example of the harmful effects of dishonest recruiting, she tells how, in 2004 Rebecca Masci a 28-year-old single mother with four children, borrowed money and made baby-sitting arrangements with her parents, so she could enter a surgical-technology program at a Kaplan school. Rebecca did very well in the first three terms of a four-term program. To complete the fourth term and graduate, she had to get experience working in a real operating room. When she entered the school, she said, she was told that there were plenty of jobs in the field and this sort of “placement” would be easy to find. When she got to the fourth term, however, she was told to go home and wait. She did get one short placement later on, but it was not long enough to qualify her for graduation. Four years later she still doesn’t have a surgical-technology qualification and she is $14,000 in debt.

• As an example of the sort of fraud that Kaplan schools have been accused of, Tamar Lewin tells the story of Charles Jajdelski who was an admissions adviser at a Kaplan Heritage School. Mr Jajdelski says that after a graduation ceremony in 2003 he found five boxes of diplomas that had been left behind. When he asked his colleagues about the boxes, he was told that the diplomas belonged to “phantom students” who were kept “on the books” (presumably so the school could get an increased amount of government support). When Mr Jajdelski continued to ask questions he was told to “forget about it.” When he phoned a high-level human resources person, he was told, “We need you to be a team player here.” In November, 2003, he reported the situation to the federal government’s Education Department. Three weeks later he was fired. He is now suing the company.