Florida AG Investigates Five for-Profit Colleges

Florida Attorney General Bill McCollum announced last week that his office has begun investigating allegations of unfair and deceptive practices at five for-profit higher education institutions.The civil investigation focuses on consumer complaints made against the University of Phoenix, the MedVance Institute, Argosy University, Kaplan Inc., and Everest University. Allegations have been made that the colleges misrepresented financial aid, accreditation, graduation rates and future job placement in the recruitment and enrollment of new students.

While some of the schools advised they have yet to be contacted about the investigation, they pledged cooperation. The University of Phoenix on Friday reported receiving a subpoena from the Attorney General for records dating back to Jan. 1, 2006.

Several dozen students throughout Florida have filed complaints with the attorney general’s office stating they were saddled with exorbitant debt, being harassed by debt collection agencies, and were not able to secure employment.

“The investigation is currently in its infancy and it would not be appropriate for us to speculate.” said Ryan Wiggins, a spokeswoman for Attorney General Bill McCollum.

Hearings from the Senate Health, Education, Labor and Pensions committee, as well as an undercover investigation conducted by the Government Accountability Office, found misleading and questionable practices at 15 schools. These schools include Kaplan College in Pembroke Pines, which has suspended enrollment of new students, and the MedVance Institute in Miami.

Federal officials found incidents at both schools where admissions officers told an undercover applicant not to worry about paying back student loans. A Kaplan College admissions officer also falsely told the applicant the school had the same accreditation as Harvard and the University of Florida.

Officials from Kaplan College indicated they would cooperate with the investigation, while officials from the MedVance Institute, owned by Baltimore-based Education Affiliates, could not be reached for comment.

“We fully support efforts to root out fraud and deception across all of higher education,” said Jacquelyn P. Muller, spokeswoman for Education Management Corp., which owns Argosy.

The for-profit higher education industry has been concerned not only by the investigations, but also by proposed federal regulations that would strip them of much needed federal aid should their students fail to find jobs following graduation or are unable to repay their student loans.

Enrollment at for-profit colleges has grown from about 365,000 to almost 1.8 million in the past few years, federal officials said. In 2009, students at for-profit colleges received more than $4 billion in Pell Grants and more than $20 billion in federal loans provided by the U.S. Department of Education. For-profit schools see community colleges as their main competitors for students as well as federal money.

But the negative publicity has resulted in enrollment declines this year and drops in share prices at some of the publicly traded companies. So much so that Keiser University in Fort Lauderdale, which is not part of the investigation, has filed a lawsuit against two administrators at Florida State College in Jacksonville, alleging officials there led a smear campaign.

Industry advocates say it’s not fair to vilify an entire industry because of complaints about individual employees.

“The attorney general should not take allegations and assume they represent an industry-wide pattern,” said Lanny Davis, an attorney for The Coalition for Educational Success, an organization comprised of 72 for-profit schools serving 200 thousand students in 37 states, “I have every confidence that General McCollum’s office will conduct a thorough investigation into the alleged misconduct of a few rotten apples.”

If you would like to learn more about this investigation or file a complaint with the Attorney General’s Office, visit their website at www.myfloridalegal.com or call (866) 9-NO-SCAM (866-966-7226).

Source:  The Credit Report with Bill Lewis – Highlands Today, an edition of the Tampa Tribune (Media General Group) – http://www2.highlandstoday.com/content/2010/oct/24/LCNEWSO1/  To review Bill Lewis’ entire consumer protection series, please visit http://www.williamlewis.us

William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news, politics, economic trends, and cutting edge issues.

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