Investigators from the GAO posed as college students and found that four out of 15 institutions they examined “encouraged fraudulent practices” to secure federal student loans, and representatives from all 15 colleges “made deceptive or otherwise questionable statements” to the undercover prospective students, according to a report published on the GAO’s web site.
ED statistics show that these schools’ aggressive and misleading recruiting practices have helped institutions bring in hundreds of millions or even billions of dollars in federally-subsidized student aid, including Pell Grants.
The University of Phoenix, with more than 200 locations and 476,000 students nationwide, took in slightly more than $1 billion in Pell Grants during the 2009-10 school year, according to ED statistics. Kaplan University, a school with 66,000 students, received $211 million in Pell Grants, and DeVry received $207 million. Ashford University took in $162 million in Pell Grants last academic year.
Four of the GAO investigators who went undercover and applied to for-profit schools were encouraged by college personnel “to falsify their financial aid forms to qualify for federal aid,” according to the report.
In one case, a college recruiter encouraged the undercover applicant to hide $250,000 in savings so he would be eligible for federal student aid.
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