For-profit colleges swindle students

Education comes second to institutional income at a steep price

For-profit colleges swindle students
Vlad Alvarez

Bobby Ruffin Jr. was only 14 when a recruiter from Ashford University called. The Birmingham, Michigan, boy thought he'd clicked on a link promising help finding money for college. It was actually just a lead generator for the sales staff of the for-profit online school.

At the time, Bobby was an A-student. His parents had pulled him from the troubled Detroit schools, hoping that home schooling would deliver something better for their son. He told the recruiter that he wanted to be a doctor. She assured him that Ashford could be a stepping stone to that dream.

Never mind that he was only in the 8th grade.

Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
courtesy of Barmak Nassirian
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."
courtesy of Rick Kriseman
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."

"She said, 'You'll be working toward a degree as a medical doctor, so when you do graduate high school you're almost there,'" Bobby says today. "I'm like, 'This is great, I'm going to talk to my mom.' And she's like, 'No, I wouldn't tell your parents because that would take away from the shock when it happens. If I were you I'd complete the program and when graduation comes around let them know. Mom and Dad will be super excited.'"

Admission to Ashford requires a high school diploma or equivalency. So when it came time to fill out the financial aid forms, the recruiter told Bobby to claim that he'd already graduated. He objected, but she insisted "the loan processing company will go back and correct everything." Still, he left the graduation date blank. Someone filled it in, because Ashford was soon receiving federal student loan money on his behalf.

Of course, it's illegal for kids Bobby's age to receive financial aid. But for-profit colleges haven't always been scrupulous when it comes to raiding the federal treasury. Between student aid and G.I. Bill programs, most schools receive 90 percent of their revenue from the American taxpayer. And the recruiters — often little more than salesmen paid largely by how many people they enroll — are driven mercilessly to keep those cash registers ringing.

Students don't get much in return. Though tuition rates can run as high as at America's most esteemed universities, the education's generally substandard. In the end, most kids wind up walking away with a questionable degree bought at top dollar — and a mountain of debt to accompany it.

Bobby took online classes for almost a year. But when he wouldn't endorse Ashford's lying on his financial aid forms, administrators miraculously discovered that he was under 18. Since this left him ineligible for federal aid, Ashford was forced to return his loan money to the feds.

The school wouldn't be eating those costs. Bobby would. Ashford, which declined interview requests for this story, sent him a bill for $13,000.

Last fall, Bobby was finally able to enroll at a real university, Eastern Michigan, where he was named a National Collegiate Scholar. Yet he still owes Ashford. Because that's a private debt, he isn't eligible for deferments while he's in school, and any future wages could be garnished.

This isn't a scam that targets only the young and naive. The for-profit industry is so rife with deceit, it's been billed as the second coming of the mortgage loan debacle. And the same people are behind it. Three-quarters of all for-profit students are enrolled at schools owned by Wall Street banks and private equity firms.

All told, they soak $30 billion a year from American taxpayers. But even in the age of slash-and-burn government, Congress has shown no interest in stopping it.

"The problem with the subprime [housing] scam was that it got so big it almost brought down the entire world's economy," says Barmack Nassirian, a former official with the American Association of Collegiate Registrars and Admissions Officers. "This one's wisely limited to $30 billion a year, which is highly sustainable. In the context of a multi-trillion federal budget, that's not even a rounding error."

Consumer Fraud as a Business Model

You may not know it, but you're sitting on $117,000. That's basically how much every American is potentially worth in government student aid. Want to attend grad school? Throw in another $114,000.

And as for-profit colleges have discovered, an 18-year-old with 100 large makes for a very easy mark.

In order to get in on the gravy train, a school only needs accreditation from some supposedly neutral body. But Congress neglected to say who should do that accrediting, resulting in a system loaded with charlatans. Some agencies have built sturdy reputations over decades. Others are little more than rubber-stamp factories, more geared toward gobbling up members' dues than safeguarding kids.

"It never occurred to [Congress] that as billions of dollars get attached to that the recognition process, the process would get corrupted," says Nassirian. "When you say yes, you gain membership dues. After all, you're living off these dues."

Yet even bargain-bin accreditation takes several years. So the titans of Wall Street found a way around this by purchasing small, failing schools to snatch up pre-owned accreditation.

Take Bridgepoint Education. Its majority stockholder is Warburg Pincus, a New York private equity firm. When it needed accreditation for Ashford University, it bought the 85-year-old Franciscan University of the Prairies, a struggling, 300-student religious college in Clinton, Iowa. Overnight, it was transformed into the online powerhouse Ashford.

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This article has to be the worst piece of one-sided journalism I've read in a long time! 

Having attended Argosy I feel I can speak to the education I received.  It would appear the author specfically found stuents who are disgruntled with their educational experience no matter the thousands of others who are quite happy with the education they have received. 

The people speaking out here can say anything they like about their experience... including lie... because it makes for more emotional reading!  It gets you riled up and feeling anti-for-profit school!

The schools, of course, cannot defend themselves because, by law, they cannot disclose any student information.  So for-profit schools make nice easy target for bored jouranalists looking to bump up the drama factor for their news rag.  For all anyone knows, these students could have been lazy, never studied, spent their financial aid on a new stereo, big screen tv, bought a new wardrobe... whatever.  But, the school is still guilty. Not the students! 


It's funny how accountability always falls on someone else and not you.  Same old story... "It's not MY fault!  It's THEM!  I'm innocent!"  We'll never get the real story... half the remarks made here about these school are halve truths as well!


You get from an education what you put into it.  You don't have to put effort into anything in life and still pass.... DUH! I know a good chunck of people at the U of M right now who pass their classes by going to homework sites to have their papers done for them... but of course it's a non-profit school so the education is much better!  

If you want something genuine out of any education... you put effort into it!  Don't blame the school... it falls to the student!


Every instructor I've ever had at Argosy was extemely intelligent, well versed, and taught with dedication and passion. The work required was on par with other institutions I've attended as well.  Having graduated from a Big Ten school I can say the education I recieved at Argosy was just as valuable and even more flexible in many ways. I never felt under challenged or that my grade was just "given" to me.  I never felt like I was being pressured into getting more financial aid than I needed.  I never felt pressured to enroll at Argosy either.  Everyone was very genuine and accommodating.   It's easy to report on something you know little to nothing about and make it look like it's crap for the sake of publicity.  (Like a bully picking on a kid they know can't fight back!)


Even the comments below are from people who have absolutely ZERO knowledge of the schools or the industry.  They read this article and immediately assigned blame and passed judgement without ever having met someone who attended, talked to the shool or a student enrolled. 

It's funny how non-profit schools follow the exact same proceedures for student financial aid, students acquire the same if not more amount of debt, but now are somehow immune to this criticism.  Is it because there are investors on one end that makes student debt that much different?


For-profit schools are not bad like this author what's everyone to believe and the education they provide is just as good, if not better than many non-profit schools!


This article is just depressing!

Truth_Teller_1 topcommenter

Having graduated from two top Universities (Lehigh and Penn State) with degrees in Engineering and Computer Science, I fell qualified to judge these ‘for profit’ schools.


Having direct experience with (and interviewing many of their graduates), I can say that many of the graduates are not college material, and they didn’t receive a ‘real education’.


There’s something about ‘going to school’, getting immersed in the subject.   Yes, there are parties and good times, but there is an environment to being in school.  You get something more in your head than a collection of facts.


The one thing that’s been proven here:  College is not meant to be a vo-tech.


For profit schools exist for four reasons: 


#1.  The mistaken reason that everyone should go to college.


#2.  Because of #1 our government is going to give anyone who has a pulse – a student loan.  A loan that cannot be discharged by bankruptcy.  A loan that will live with them probably till they’re 40 or 50 or death.


#3.  The student loans became the lifeblood of For Profit schools.


#4.  The economy is so bad that people are willing to try anything – including getting $25,000 to $40,000 in debt for a $12/hr job.   When you realize the job market is saturated, and these jobs don’t pay a liveable wage – well “your gonna carry that weight for a long time “(the Beatles).


We used to call these schools: “high school with ash trays” or “clown college of comic book knowledge”.  But hell, you can’t even smoke anymore.


Get a culinary arts degree?  How about TSA?   Criminal Justice (security guard), Medical Coding, Veterinary assistant?  


Twenty years ago all of these jobs were for HS graduates, now you’re going to get a ‘degree’.   But read that degree carefully:  Most if not all of those credits are non-transferrable, the school prints those degrees in the same way our government now prints money.


It's obvious the commercials are aimed at 'trailer trash' or 'ghetto' folks, whom they will help apply for a student loan.


These scammers need to be PUT OUT OF BUSINESS.


Education from Penn State, huh?  Are you a child molestor too?  I mean... I'm applying the same logic you are in your points.  Your non-profit education seems to have really prepared you to comment on something you don't understand.


and every single student they've ripped off need to be paid back WITH interest.


 @mikehext Not only should these schools be put out of business, but those who created and perpetuated this fraud knowingly should be put behind bars. There's a reason we have jails.