

For-Profit College Group Sued as U.S. Lays Out Wide Fraud - nighthawk
http://www.nytimes.com/2011/08/09/education/09forprofit.html

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jameskilton
"Education Management, which is based in Pittsburgh and is 41 percent owned by
_Goldman Sachs_ "

Excuse my french but holy fucking shit. Is there anything these scumbags DON'T
have their hands in? Energy, Finance, Housing, now we find out about
Education.

What's it going to take to arrest these people already? How many people have
they screwed over in their never ending quest for pure profits?

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gamble
The financial industry represents a third of American corporate profits.
Goldman Sachs is the most prominent player in the financial industry. Like
Britain, the US is quickly becoming simply a hedge fund, with a government
attached. With practically no constraints on corporate money entering politics
and voters perpetually responsive to political advertising, I wouldn't hold
your breath waiting for politicians to seriously take on the most powerful,
influential industry in the country, by far.

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yuhong
>voters perpetually responsive to political advertising

Maybe not anytime soon, but perpetually?

~~~
khafra
"Perpetually" means "always, continually." US voters are very reliably
responsive to political advertising; media campaigns seldom fail to swing
opinion in the direction they want to.

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axiom
The problem is not for profit colleges, the problem is guaranteed government
loans to anyone who goes to college. This is exactly what happened with the
housing bubble. You have a government entity (in the housing case it was
Fannie Mae and Freddie Mac) that's giving out money without any checks and
balances.

So as a result you get a few amoral businesses who buy up colleges that have
regional accreditation and balloon their enrollment with online programs in
order to collect the free money being handed out by the government. This shit
only works as long as you have a blank cheque issued by the government to
anyone who goes to a regionally accredited college.

The solution is not to clamp down on the only bit of free enterprise that
still exists in higher education. The solution is to let the market price the
risk/value of college degrees.

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joe_the_user
_The problem is not for profit colleges, the problem is guaranteed government
loans to anyone who goes to college._

1) It is hard to claim that for-profit colleges aren't part of the problem.
They clearly have more of an incentive for this kind of a fraud (though other
schools might have some incentive).

2) For profit colleges have expanded primarily based on student loans. Without
student loans, indeed for-profit colleges wouldn't be a problem but mostly
because they wouldn't exist.

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yummyfajitas
_They clearly have more of an incentive for this kind of a fraud (though other
school might have some incentive)._

Could you explain this statement?

Also, many non-profit colleges (including plenty of schools as bad as any for-
profit) also would not exist without student loans and other govt subsidies.

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fletchowns
There are a lot of parallels with this and the 2008 housing bubble. The
recruiters are just trying to get as many students to enroll as possible, they
don't care whether or not the students can actually afford the loans. They are
just a bunch of scumbags that prey on people that are trying to get an
education. As those jerks are making money hand over fist, tuition at state
run universities is going up like crazy, even as they are having to cut tons
of programs.

I hope the US government cleans them out.

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cheez
Actually, the US government is helping them out.

Guaranteed loans? I'll take 3 please.

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papa
Frontline had an interesting documentary on this industry a year or so back
called "College Inc". If I remember rightly, they even discussed one of the
schools named in the suit, Argosy University (along with a lot of hard-sell
tactics and high student loan default rates that accompany the for-profit
industry).

It was an eye-opening program. Here's the link if interested:
<http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/>

I think Netflix also has the episode available for online streaming.

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mathattack
Any time you have a massive government subsidy to an industry, people will
eventually line up to scam it.

In this case, it's a shame because there are a lot of innocent bystanders who
get scammed. In addition to the taxpayer footing the bill by providing lower
cost loans, people graduate the schools with worthless degrees.

I am a big fan of charter schools, and in theory support for-profit colleges,
but I wish I had more data points on where they succeed. Perhaps there will be
a collegiate disruption similar to Khan Academy.

