For-profit colleges defend controversial recruitment practices

There allegedly were widespread recruitment violations at schools run by EDMC.

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.…Read More

With Goldman’s foray into higher education, a predatory pursuit of students and revenues

Education Management Corp. was already a swiftly growing player in the lucrative world of for-profit higher education, with annual revenues topping $1 billion, but it had its sights set on industry domination, the Huffington Post reports. So, five years ago, the Pittsburgh company’s executives agreed to sell its portfolio of more than 70 colleges to a trio of investment partnerships for $3.4 billion, securing the needed capital for an aggressive national expansion. One of the new partners brought an outsized reputation for market savvy, deep pockets and a relentless pursuit of profits–the Wall Street goliath, Goldman Sachs…

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Justice Dept. accuses college of breaking law

The complaint alleges student enrollment was the sole focus of its compensation system.

The Obama administration and four states are accusing a private for-profit college corporation of illegally paying recruiters to enroll students, the latest action in an examination of the industry’s recruitment techniques and an allegation the company called “flat-out wrong.”

The Justice Department and attorneys general of California, Illinois, Florida and Indiana on Monday intervened in a whistleblower suit against Pittsburgh-based Education Management Corp. Their complaint says the company broke a 1992 law prohibiting for-profit colleges from paying recruiters incentive compensation.

The law was passed to stop overly aggressive sales procedures.…Read More