It's the latest round of scrutiny for the for-profit education industry that has included a federal investigation and congressional report, and comes as the U.S. Department of Education is finalizing new rules on its federal student aid programs.No charges have been filed in the Florida cases, which are civil -- not criminal -- investigations. Florida is looking into allegations of misrepresentation of financial aid and unfair or deceptive practices in a variety of areas including recruitment, enrollment, accreditation, placement and graduation rates.
The state sent subpoenas -- covering a wide range of info including graduation statistics and marketing literature -- to the University of Phoenix, Kaplan University, Medvance Institute, Concorde Career Institute, Keiser University, Argosy University, Sanford-Brown College and Everest College. The attorney general's office said the schools objected at first, but are now negotiating with the state on the documentation they have to turn over to the investigation. So far both sides have agreed on a timetable and the schools have started providing data.
Kaplan spokeswoman Michelle Pore sent the following university statement to Consumer Ally on this issue:
"Kaplan and its employees are dedicated to the highest ethical standards and responsible practices. We work diligently to ensure that our students have a clear understanding of the requirements and cost of their education and have an admissions experience that is informative and helpful. We want our students to succeed and meet the academic requirements of our programs. That's why we created the Kaplan Commitment, which offers students a period of time to take classes for credit and decide whether they can juggle the rigors of a Kaplan education with their work and family life. If they decide they can't, they leave with no tuition paid or loans incurred."
Ryan Rauzon, spokesman for University of Phoenix's parent company Apollo Group, said in an email to Consumer Ally that the company is working on expanding student protections and enhancing programs to help students complete their degree work.
"We support efforts to enhance accountability within higher education and we strive to play a leadership role in continuously improving and transparently reporting the outcomes and achievements of students served by our schools," he wrote. Rauzon pointed to a number of initiatives the University of Phoenix has put in place to ensure prospective students understand the financial end of their college education.
Part of the impetus for the Florida probe came from a U.S. Government Accountability Office report released in August detailing an undercover sting that used four fake students to check up on the colleges' admissions programs. Investigators allegedly found four of the 15 colleges encouraged fraud and that all the schools used questionable tactics or made allegedly deceptive statements to the undercover applicants.
While the schools weren't named, the report detailed instances at a Florida school where an applicant was coached during the entrance exam and school officials used high-pressure sales techniques -- scolding one applicant for refusing to enroll before speaking with financial aid. There were similar tales from schools in Pennsylvania, California, Illinois, Washington, D.C., Texas and Arizona.
The Florida investigation comes at a time when the U.S. Department of Education is putting into place new rules for federal student aid programs at for-profit, nonprofit and public colleges and universities. Those rules are slated to go into effect next summer and include protection for consumers and strengthens the Education Department's ability to take action against a school that uses deceptive advertising, marketing or sales tactics.
And how strong can those sales tactics be? Before being swayed by marketing, read up on some for-profit school stats.
According to the U.S. Department of Education, students at for-profit schools make up 11% of all higher education students, 26% of all student loans and 43% of all loan defaulters. With more than a quarter of for-profit school getting 80% of their revenues from federal student aid programs, the Obama administration coordinated 18 months of negotiations to devise the new rules.
Nor is the Florida investigation the only one out there. University of Phoenix's parent company, Apollo Group said in a filing with the U.S. Securities and Exchange Commission the federal Department of Education will review the university's administration of federal student financial aid programs starting Dec. 6, 2010. The probe will first look at the financial aid years 2009-10 and 2010 to the present.