Accusations Prompt Changes at For-Profit Colleges

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Some of the nation’s most prominent for-profit colleges have announced changes in their recruitment practices in the wake of a scathing congressional hearing into ethics violations.

Westwood College and the University of Phoenix say they will stop paying their recruiters based on how many students they enroll, and Kaplan Inc. has suspended recruitment at two campuses while it investigates how to tighten procedures.

Those three were among several for-profits accused during a hearing by the Senate Health, Education, Labor and Pensions Committee last week of unethical recruiting, high-pressure sales tactics, lying and possible fraud. The testimony, based on an investigation by the U.S. General Accountability Office, included allegations of lying to applicants about the colleges’ accreditation, helping prospects answer questions on admissions tests and coaching them about hiding financial assets when applying for federal aid.

Westwood announced on Monday that it will convert to fixed salaries for all recruiters by Aug. 21, which presumably would reduce incentives for recruiters to engage in unethical practices in order to enroll more students.

The college also said it is investigating “the admissions and financial aid processes at all campuses,” raising its admission requirements, preparing a new admissions presentation and implementing “independent third-party verification programs so that new students will confirm they have both received and understood the information provided through the admissions and financial aid processes.”

Westwood, operated by the Denver-based Alta College, reports 15,000 students attending its 17 campuses around the country or its on-line programs.

Late last week, Kaplan – which reports serving 119,000 students online and at 75 campus-based schools – suspended enrollment at its campuses in Pembroke Pines, Fla., and Riverside, Calif., which were cited in the Senate hearing. Kaplan said in a prepared statement that it is investigating the recruiting and enrollment practices there and will “ensure that such incidents are not repeated anywhere” in its system.

Kaplan, which provides a variety of educational products, is the revenue leader for its owner, the Washington Post Co. The Post released an earnings report last week which said that rules proposed by the U.S. Education Department to further regulate such for-profit colleges “could adversely affect, among other things, Kaplan's ability to retain admissions and financial aid advisors” and could “have a material adverse effect on Kaplan's operating results.”

Also late last week, the University of Phoenix said it is investigating the allegations and reiterated several previously announced changes, including elimination of “admission targets as a component of compensation.” 

The University of Phoenix, owned by the Apollo Group, reports about 475,000 students through its campus-based and online programs.

In addition, the Career College Association called the GAO findings “deeply troubling” and announced several steps to help its 1,800 organizational members “assure full compliance with regulations and accreditation requirements in all areas.” Those include expanding the association’s compliance training and convening a ongoing summit “to assess the state of practice in recruitment, admissions, financial advising and other critical compliance areas.”