Education Management Corp. (EDMC), one of the nation’s largest operators of mostly online for-profit colleges, filed a legal defense Feb. 6 of its scrutinized compensation program for recruiters who were paid according to how many students they roped into classes and school loans.
Pittsburgh-based EDMC, which manages more than 100 private for-profit colleges attended by 158,000 students across the U.S., said in a court briefing that compensating student recruitment officers wasn’t illegal because the federal government had yet to institute regulations against the practice.
The U.S. Department of Education (ED), along with whistleblowers, Washington, D.C., and five states, has charged that EDMC violated clearly-states federal laws that prohibit colleges and universities from linking recruiters’ pay to the number of students they enroll.
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The legal action against EDMC looks to recover some of the more than $11 billion the company has received in federally-backed student aid “obtained through false statements and which enriched the company, its shareholders and executives at the expense of innocent individuals seeking a quality education,” according to a Justice Department statement.
Attorneys for EDMC wrote in the company’s defense that ED’s 2011 declaration that all forms of enrollment-based recruiter compensation had been outlawed “explicitly acknowledging in the process that the regulation in this case allowed salaries bases in part on enrollment success.”
EDMC’s filing claims that before the federal crackdown on recruiter compensation, recruiter pay could be at least partly linked to the number of students who were signed up for loans and classes.
As long as compensation wasn’t based entirely on recruitment, EDMC was within legal boundaries, the company argued. Bonnie Campbell, an attorney for EDMC, said in a statement that “the case should be dismissed with prejudice” and that the government’s case is “legally flawed and factually insufficient.”
“The court should dismiss all claims against EDMC before further harm is done to students and their schools, who did nothing but comply with the law,” Campbell said.
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