Not an Isolated Case

The General Accounting Office (GAO) recently released a report revealing that some publicly traded for-profit colleges have been pumping up their enrollment numbers by deliberately admitting unqualified students.

Federal law requires that students who have neither a high-school diploma nor its equivalent must pass a government approved “ability to benefit” (ATB) test before becoming eligible to obtain federal financial aid to pay for college. But during an undercover investigation it conducted at a local branch campus of a large proprietary school chain, the GAO discovered that the school helped prospective students cheat on the ATB test. In addition, while conducting site visits at for-profit colleges around the country, the accountability office identified incidents at “two separate publicly traded proprietary schools” in which recruiters “referred students to diploma mills for invalid high school diplomas in order to gain access to federal loans without having to take an ATB test.”

Such abuses are serious, the GAO writes, because they can be very damaging to the students involved. “Unqualified students who receive federal financial aid for higher education programs are at a greater risk of dropping out of school, incurring substantial debt, and defaulting on federal student loans,” the report states.

The accountability office goes out of its way, however, to emphasize that its findings “do not represent nor should they be interpreted as implying widespread problems at all proprietary schools.” Proponents of the for-profit higher education industry have jumped on that statement to downplay the abuses and say that the incidents the GAO uncovered were isolated cases.

A typical response to the report came from financial analysts at Signal Hill, a Wall Street investment banking firm. “Whether the allegations raised in the GAO report will result in a public investigation of a company we cover, we cannot vouchsafe,” the analysts wrote. “However, we do feel confident that whatever action was or was not taken was more likely the result of an individual’s good intentions coupled with poor judgment rather than the result of some cynical systematic conspiracy.”

At Higher Ed Watch, we don’t know how widespread these improper practices are. But we have a feeling that they are a little more common than the good folks at Signal Hill would have us believe.

First of all, the GAO did not have to do too much digging to find these abuses. Instead, officials at the accountability office sent two analysts to pose as prospective students at a proprietary school chosen primarily because of its proximity to their Washington offices. Did the analysts just get lucky and find, on their first try, the one isolated case where a school was giving students the answers to the questions on the test ahead of time? That seems like a bit of a stretch to us.

Second, this is not the first time that such allegations have been made. As the report notes, both the Department of Education’s Inspector General and the New York Department of Education have found similar problems in the past. In addition, such allegations have been raised in lawsuits against some of the largest publicly traded for-profit school chains, including a False Claims lawsuit recently filed by former top officials at a suburban Atlanta branch of Career Education Corporation’s American Intercontinental University.

Third, as a senior writer at The Chronicle of Higher Education, I uncovered similar types of abuses at the Los Angeles branch of American Intercontinental University (which the company has since shut down). Here is an excerpt from an article I wrote about the school for The Chronicle in January 2006:

[Former] admissions officers said they would often instruct students without a diploma to go to one of several unaccredited high schools in the area where they could “purchase” a diploma for about $100 or $200.

One such school was Victory High School, whose website promises students the ability to get “an immediate high-school diploma.” The school, which doesn’t offer any classes but only testing, advertises its services to trade schools, vocational schools, and colleges, saying that the testing it provides gives them “more control” of their applicants and allows them to “qualify more applicants for funding.”

The Los Angeles public school district doesn’t recognize Victory High School. According to Stephanie Brady, a district spokeswoman, a credential offered by Victory “does not meet the standard of equivalency to a recognized high school diploma.

 

For those reasons, we do not believe that the abuses the GAO uncovered were an isolated case or the result of “an individual’s good intentions.” At the same time, we fully acknowledge that we don’t know how widespread they are. But it seems to us that it is incumbent on the Education Department and Congress to find out.

[Update: The House Committee on Education and Labor has just announced that its higher education subcommittee is planning on holding a hearing on the GAO’s findings next week.]