GAO Says Internal Review Found No Bias in For-Profit Report

The Government Accountability Office said today that an internal review of the need to issue a revised report on recruiting by for-profit colleges found no “personal bias or conflict of interest” in preparation of the report.  However, the GAO stated there “were process, supervisory and analytical weaknesses that led to errors and missing context.”

The report, issued in August in conjunction with a Senate Health, Education, Labor and Pension Committee hearing on for-profit colleges and revised in November, is at the center of an ongoing battle being waged against the GAO and the U.S. Department of Education by two major for-profit college groups.

The Coalition for Education Success, a group led by the head of a hedge fund that has a major investment in a for-profit college, last week filed suit against the U.S. government on what it claimed were grounds of “professional malpractice” and is seeking unspecified damages.   The suit claims the report was a primary factor in a 14 percent loss of capitalization (about $4.4 billion) by the publicly traded higher education firms.

The lawsuit alleges that the GAO didn’t follow professional standards for conducting such an investigation.

Avy Stein, co-chairman of the coalition, was clearly displeased with the GAO statement.

“The GAO’s terse statement about the findings of its internal inspection does not square with the objective facts regarding errors the GAO admitted to making when an amended report was issued in November 2010,” he said and recommended that the GAO withdraw the entire report. He said it continues to cause “billions” of dollars of damage to the education firms.

The Association of Private Sector Colleges and Universities, the main lobby group for for-profit schools has sued separately to block other new regulations – including one on how recruiters may be paid – that are to go into effect in July. The lawsuit claims that procedures used in adopting the new regulations did not follow proper protocols.

The association also rejected the new GAO statement.

“The fox is not only guarding the henhouse, he’s writing reviews about his own performance,” said APSCU President Harris Miller.  “Forgive us if we are not convinced.”

In the summary released today, the GAO reiterated that the revisions to the original report did not change its overall findings or conclusions. The summary said the internal review was conducted by the managing director for quality and the deputy ethics officer, but did not name either official.

The GAO said the internal review would not be released publicly but was being sent to members of Congress who had written the agency about its investigation of for-profit recruiting.

“We were pleased to see that the inspection showed the revised report was fully supportable and there was no bias or conflict of interest at all involved in the work. We continue to stand by the overall message of our report and we have no plans to withdraw it,” said Chuck Young, managing director of GAO public affairs.

 “However we are concerned that there were weaknesses in some of the quality assurance steps taken that ultimately required GAO to issue some corrections to the report to provide more precision and context. Our goal is to never have to issue revisions. As a result of this internal review we are immediately implementing the reviewers’ recommendations to tighten up our process to ensure such issues do not occur again.”

The report, which involved visits to 15 for-profit schools by GAO agents posing as prospective students, allegedly found possible criminal fraud in recruiting practices at four locations, and what it said were deceptive or “otherwise questionable statements” made by college personnel at all 15 locations.

The investigation, requested by Sen. Tom Harkin (D-Iowa), chairman of the HELP committee, had contributed to intensified efforts to regulate for-profit colleges more strictly. Among the proposed regulations is the so-called “gainful employment” rule that would tie career colleges’ eligibility to participate in federal student loan programs to whether their graduates can earn sufficient money to repay the large loans needed to pay for their education.

Harkin’s ongoing probe of the for-profits has found that some of the schools have graduation rates only in the teens, despite billions of federal student aid dollars going to the schools.

The senator took to the Senate floor as recently as Monday evening to call for an end to “deceptive” recruiting by for-profits that he said plays on the fears of low-income and minority students.



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