Want to avoid massive loan payments for worthless degrees or certificates? In the U.S., it’s crucial to attend regionally accredited post-secondary schools. Be cautious of institutions that boast national accreditation or lack accreditation entirely.
Unless a school has an impeccable reputation, like an Ivy League institution, choosing a state university or college is often safer and more economical. Additionally, borrowing from a U.S. government loan program is generally safer than borrowing from a private lender.
The experiences of those who fell victim to the following ten outrageous U.S. for-profit schools offer valuable lessons. Fortunately, many students received financial relief, thanks to taxpayer support.
The Brown Mackie College
On November 16, 2015, the U.S. Department of Justice praised its role in securing a $95.5 million settlement against Education Management Corporation (EMC). This settlement resolved four separate False Claims Act allegations introduced in federal courts. One allegation claimed that recruiters, operating in a “high-pressure boiler room,” were paid solely based on how many students they enrolled.
Brown Mackie College (BMC), owned by EMC, offered bachelor’s degrees, associate degrees, and certificates in various programs. Despite initial accreditation and licensing, the school experienced significant enrollment drops and campus closures across the country.
International Academy of Design and Technology
Amanda Luciano’s story highlights the devastating effects suffered by students of the for-profit International Academy of Design and Technology. After borrowing $51,000 and repaying $40,000, she still owed $81,000.
Luciano borrowed from a private lender on the advice of a school recruiter instead of opting for a federal government loan. Despite her significant repayments, her balance continued to grow, with her $500 monthly payments only covering the interest. She realized the school was part of a predatory scam.
Although a federal judge ordered an automatic cancellation of government-backed loans for students of 150 for-profit colleges due to misconduct, Luciano’s private loan meant she remained responsible for the debt.
ITT Technical Institute
ITT Technical Institute, with 138 campuses in 39 states as of December 2015, faced significant financial losses from settlements, totaling around $12.9 million, including legal and administrative fees. A local news investigation revealed a student received a 100% score for submitting a noodle recipe as part of a computer forensics assignment.
ITT Technical Institute also had to cancel the loans of 200,000 students in a $6 billion settlement linked to “substantial misconduct” after the U.S. Supreme Court declined to block students’ debt cancellation.
Brightwood College
Brightwood (formerly Kaplan) College, operated by Education Corporation of America, offered courses in health, criminal justice, and trade programs. The U.S. Government Accountability Office found that all 15 schools tested, including Kaplan, made “deceptive or otherwise questionable statements” to undercover applicants. Admissions representatives were caught on tape!
Brightwood College students’ loans were cleared, along with those of students from other schools proven to have been defrauded by their for-profit institutions.
Corinthian Colleges, Inc.
At its peak, Corinthian Colleges, Inc. operated over 100 campuses across the U.S. and Canada, offering courses in health care, business, criminal justice, transportation technology, construction trades, and information technology.
Investigations in both Canada and the U.S. led to the suspension of Everest College’s operating license in Ontario and the closure of the schools’ 14 Canadian campuses. The corporation went bankrupt after closing its U.S. locations.
Corinthian faced allegations of misrepresentation and predatory lending, leading to government lawsuits and loss of federal funding. The U.S. Department of Education canceled $5.8 billion in federal student loans for 560,000 students who attended Corinthian-affiliated schools.
Le Cordon Bleu
Career Education Corporation’s Le Cordon Bleu faced a five-year investigation, with prosecutors alleging that the corporation pressured employees to enroll students and engaged in unfair practices. Le Cordon Bleu closed in 2016. Students could have received debt forgiveness depending on their attendance dates.
Relief was available under six programs, including the Borrower Defense to Repayment, for graduates who could prove Le Cordon Bleu misled them about job placement rates or accreditation.
DeVry University
The U.S. Federal Trade Commission (FTC) found that DeVry University’s claims about graduate employment rates and earnings were deceptive. As a result, the FTC sent payments to affected DeVry students, totaling $49 million. Some recipients even received multiple checks.
These payments represented the students’ shares of the settlement between the FTC and DeVry University and did not prevent them from seeking additional relief under federal or state law.
The Art Institutes
The Art Institutes, with campuses across the U.S., closed its last one in 2023 amid fraud accusations. The U.S. Department of Education stated the schools lured students with “pervasive lies.” President Joe Biden noted the institution falsified data and misled students, leading to significant debt without promising career prospects.
The Department of Education erased loans for 317,000 people who attended the school between January 1, 2004, and October 16, 2017, costing nearly $160 billion, including previously canceled loans.
This payback included a $95.5 million settlement between the Art Institutes and the Department of Justice in 2015. The source of the remaining funds for these and other for-profit schools found guilty of harmful practices remains unclear.
The Famous Writers School
Fraudulent practices among for-profit schools are not new. Jessica Mitford’s 1970 exposé revealed that The Famous Writers School took tuition money while providing little value.
Mitford’s interviews uncovered that renowned authors were too busy to review student aptitude tests. Poet Phyllis McGinley admitted to being a figurehead. The school sent students cleverly disguised form letters.
Trump University
The “trials of Trump University” bear similarities to The Famous Writers School.
Donald Trump promised to share his real estate success secrets through Trump University. The process involved a $1,500 three-day seminar followed by a $35,000 mentorship program. While over 80,000 attended the free seminar, only 6,698 signed up for the paid programs.
Attendees were promised a “family” environment with access to a hotline and lenders for investment money. Some students complained about the cost and lack of ongoing support.
Trump ultimately settled fraud cases for $25 million, reimbursing victims and paying a penalty for operating an unlicensed university. Trump admitted no wrongdoing, stating that Trump University would have prevailed at trial.
Choosing the right school is a critical decision that can significantly impact your future. By being vigilant and informed, you can avoid the pitfalls of for-profit schools with questionable practices and secure a valuable education.
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