For-profit Schools Getting Sued: A Growing Trend in Higher Ed?

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When most students attend a university, be it public or private, the money they pay into tuition goes back into the school–be it for new dorms, professors’ salaries, taxes, or any other expense. For years, our institutions of higher learning have operated in this manner. But a growing trend in higher education is for-profit schools, ones that operate to make money for their investors and shareholders by offering a service, in this case, and education. They are often characterized by fierce publicity campaigns, and wide recruitment techniques, getting as many people as possible to enroll in programs.

Do these names ring a bell….University of Phoenix and DeVry University? They, among others, are examples of these for-profit schools.

But recently, for-profit schools are under fire, and seven former employees of Premier Education Group, a company that owns over 24 schools in almost a dozen states, filed a lawsuit against their former employer. The plaintiffs allege that administrators purposefully misled students and gave them false information about graduation, testing, and certification; all as a means to rake in the federal funding they received from the students. They say the schools were willing to keep under-performing students at the school, and mislead others, so that they could collect this funding, thereby increasing their profits. The allegations go so far as to say test scores were fudged in order to keep students in school rather than risk losing them- and their money. Obviously, this is unacceptable at any establishment of higher learning. The programs Premier offers cost about $10,000 a year, oversee 17,000 students, and the company receives $112 million per year in Pell Grants. Needless to say, this isn’t pocket change.

Politicians have also taken notice of for-profit schools. Senators Dick Durbin (D-IL) and Tom Harkin (D-IA) introduced legislation in 2013, which would restrict the amount of federal funding for-profit schools could collect. Rather than getting up to 90% of funding from the federal government, schools would only be eligible to receive up to 85% through federal funding. While this doesn’t seem like a huge drop, it would be a step in the right direction for deterring for-profit schools from treating students as cash cows. Hopefully, publicity raises awareness for students to make more informed decisions about attending a for profit school.

But aside from this lawsuit, what’s the deal with for-profit schools?

The lawsuit points toward a bigger trend of people being skeptical of for-profit colleges potentially taking advantage of students- whether by preying on them for the federal money they bring in, or providing less than exceptional educations leading to hardship post-graduation. Studies have shown that students at for-profit schools end up having higher rates of unemployment and greater debt after graduation than their counterparts at traditional schools, according to some studies, at almost double the rate- as this graph shows.

These stats are important because students at for-profit universities account for almost 10% of all degree-seeking students in the United States, a number that continues to increase with time. If a large contingent of students are going to use for-profit schools to get a degree, they should be protected as much as possible against any unfair practices the schools may have.

Imagine if a well-known state school was employing similar tactics: people would be up in arms about it. For-profit colleges, though not as well known, still graduate thousands of people into the workforce each year. These students need to be as prepared as much as possible for what’s ahead, and informed of the challenges attending a for-profit college can present…. before enrolling in one.

Even Adult Swim joined in on the fun, making this video that mimics the advertising strategies for-profit colleges often use, poking fun at the lack of accreditation, lax admission standards, and lofty claims many of these schools make to students.

This isn’t to say that all for-profit schools rip off their students. In fact, for-profit schools have been an effective way for many students to receive degrees in their field. But this lawsuit shows how important it is to keep for-profit colleges honest when giving students their options, especially when receiving federal funds.

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Molly Hogan (@molly_hogan13)

Featured image courtesy of [Tracy O via Flickr]

Molly Hogan
Molly Hogan is a student at The George Washington University and formerly an intern at Law Street Media. Contact Molly at



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