When for-profit colleges deceive students

For-profit colleges and vocational schools — especially online programs — provide degree-earning opportunities to many Americans who might not otherwise be able to pursue higher education due to financial pressures and work or family obligations. But as countless complaints and lawsuits suggest, some for-profit institutions engage in deceptive, and even illegal, recruiting and retention practices.

In early October, the Federal Trade Commission (FTC) put 70 for-profit schools on notice that they could incur costly sanctions for certain activities. Specifically, the schools were warned about misrepresenting the “career outcomes” of their graduates. Learn more so you and your family members can avoid paying for a degree that’s not worth the paper it’s printed on. 

Clear warning

The FTC’s Notice of Penalty Offenses covers practices such as exaggerating the percentage of the school’s graduates who find jobs in their chosen field and overstating the amount of money a graduate can expect to earn. Penalties for violations are steep — up to almost $44,000 per incident.

Unfortunately, lying about their graduates’ career success isn’t the worst of some for-profit institutions’ crimes. The notorious (and now defunct) ITT Tech coerced students into applying for high-interest private loans that saddled them with unmanageable debt. In one instance, a student was told two weeks before he was due to graduate that he had to apply for a new, high-rate loan.

Steer clear of trouble

It’s important to note that not all for-profit colleges deceive students or use illegal recruiting tactics. But if you’re considering enrolling in a for-profit college, you should carefully research it and be on the lookout for red flags.

For example, predatory institutions often target certain groups, such as military veterans. One school was required to return $30 million to students for deceptive practices including building official-looking websites such as Army.com and NavyEnlist.com. Another institution was accused of sending recruiters into low-income neighborhoods to round up unqualified individuals to apply for student loans.

The Better Business Bureau warns would-be students to be wary of any college that:

• Is unaccredited,
• Charges high application or enrollment fees,
• Uses high-pressure sales tactics, such as claiming you must commit to enrolling “now,” before you have time to consider the decision,
• Makes unrealistic career or salary claims,
• Awards degrees for very little (or no) work, and
• Encourages you to lie on financial aid forms.

This final red flag is reason enough to walk away. If you’re found guilty of falsifying financial aid forms, you’ll have to return the money and face fines and possible prison time.

Possible remedy

If you believe you’ve already been tricked into a predatory loan by a for-profit institution, you may qualify for a Borrower Defense Loan Discharge, administered by the U.S. Department of Education. Apply at studentaid.gov/borrower-defense. Contact us for more information about consumer fraud schemes.