For-Profit College: “Pulse and a Pell”

Education Management Corporation, the nation’s second largest for-profit college operator, recently agreed to pay almost $90 million to settle a case accusing it of paying its employees based on how many students they enrolled, according to the New York Times. Paying recruiters based on the number of students they enroll is illegal under federal law. The top 10% of Education Management’s admissions workers were rewarded with all-expenses-paid vacations Cancun, Puerto Vallarta, and Las Vegas.

While these for-profit recruiters were staying at places like this:

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Or enjoying this scenery:

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Or enjoying this nightlife:

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While for-profit college students and graduates were stuck with expensive degrees, a job market that did not live up to what the for-profit college recruiters promised, and faced default on their student loans (which aren’t dischargeable in bankruptcy).

What’s the problem with a for-profit college recruiter using high-pressure tactics to increase enrollment?

According to this U.S. News and World Report article:

  1. For-profit colleges ($15,130 in tuition and fees on average) are more expensive than in-state junior colleges ($3,264) and in-state four year colleges ($8,893).
  2. Graduates from for-profit colleges are less likely to find employment than graduates from other college. One study shows that resumes listing degrees from for-profit colleges get 22% less call backs than those resumes listing degrees from traditional colleges.
  3. For-profit college graduates are three times more likely to default on their student loans than a graduate from a traditional college. For-profit college graduates are more likely to make less money than traditional college graduates and have higher student loans.

All that is a recipe for a high rate of default student loans that is currently playing out across our country.

Why should I care about for-profit college recruiters if I don’t attend a for-profit college?

Some for-profit college operators (like Education Management) receive as much as 90% of their tuition money comes from federal aid (including subsidized loans and Pell grants). The taxpayers footed the bill for Education Manage to the tune of $11 billion between July 2003 and June 2011, while the inside joke at the company was that students only needed a “pulse and a Pell” to enroll.

If you have been taken advantage of by a for-profit college recruiter, contact us to see if we can help.