GAO Revises Report on For-Profit Schools

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The Government Accountability Office has taken the unusual step of revising parts of its report on for-profit schools’ recruiting practices, lessening the severity of some charges of deception leveled in it, but officials said the changes did not alter its findings or conclusions.

In an undercover investigation earlier this year, the GAO had agents pose as applicants and speak with representatives from 15 for-profit colleges of various sizes and disciplines. The original report stated that four of those representatives encouraged fraudulent practices, such as lying on federal aid forms, and that all 15 had made “deceptive or otherwise questionable” statements about issues such as graduation rates and potential salaries for careers in which the schools specialized.

The report served as a driving force behind efforts of some Senate Democrats and the Obama administration’s efforts to regulate the for-profit education industry and the billions in federal loans it receives. The Education Department is expected to issue rules soon that would base federal loan eligibility on the debt-to-income ratio of their students. Although the regulations will apply to all colleges, they will affect primarily the for-profit institutions.

The potential for new regulations has shaken the industry. Just this week, two major for-profit educators – Kaplan Higher Education and Apollo Group (which owns University of Phoenix) each laid off about 700 employees, many of them recruiters.

The revised version of the report, which was released last week, includes a total of eight revisions made to different examples of interactions between GAO applicants and the school officials.

A number of the changes do change the tenor of some conversations. For example, the original report recounts an instance in which a school representative “told the undercover agent that by the time the college would be required by [the Department of] Education to verify any information about the applicant, the applicant would have already graduated from the 7-month program.

In the revised version, it is revealed that the undercover applicant suggested that this would be the case, and the school representative “acknowledged this was true.”

Another example originally included a school representative telling an applicant that graduates pursuing jobs in architectural and civil drafting typically make between $120,000 and $130,000 per year. According to the Department of Labor, the report points out, the more accurate estimate is about $70,000.

The revised version makes it clear that the representative also stated “that in the current economic environment, the applicant could expect a job with a likely starting salary of $13-$14 per hour or $15 if the applicant was lucky.”

None of the revisions affected the four instances in which the colleges allegedly encouraged fraud. In those cases, two applicants were encouraged to lie and say they had no money in the bank, and another two were told to falsely increase the number of dependents in their respective households.

Sen. Mike Enzi (R-Wyo.), in a letter to the GAO this week, said the revisions so alter the findings of the report that it should be withdrawn. A spokeswoman for Sen. Tom Harkin (D-Iowa), Justine Sessions, said Harkin stands by the report’s findings. The Department of Education is not commenting on the changes.

Only 12 of the approximately 1,000 reports done last year by GAO were revised, according to an e-mail from GAO spokesman Chuck Young to the Washington Post.