For-Profit College Group Sued as U.S. Lays Out Wide Fraud
By TAMAR LEWIN August 8, 2011
The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation's second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011. While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers' claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled.
DEVRY IS NEXT. The Department of Justice is currently reviewing the many complaints from students & whistle-blower employees. DeVry University & other for-profit schools educate less than 10 percent of all college students but get 25 percent of all Pell grants, he said. For-profit school students make up 44 percent of the federal student loan defaults. Part of this is due to the fact that for-profit schools' consumer base are disproportionately poor students and students of color who are the first in their families to go to college.
Too many students are paying $20,000 to $30,000 for associate's degrees but their diplomas aren't landing them jobs.
"They're no more employable than they were before and now they're deep in debt," said Durbin, the assistant Senate majority leader.
For-profit schools are fighting to keep their profits and attempting to stop new regulations that would withhold federal education loans and grants from its schools with high student debt and low student loan repayments.
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