Skip to Main Content



New York Times

The Justice Department sent a powerful message last week when it filed suit against the nation’s second-largest for-profit college company, charging it with fraudulently collecting $11 billion in federal student financial aid from 2003 through June 2011.

The suit against the Education Management Corporation, which enrolls about 150,000 students in more than 100 schools, puts the for-profit sector on notice that the government is at last prepared to move decisively against the unscrupulous conduct that appears to be all too common in the industry.

The Education Management case began in 2007 when two former employees of the company filed a lawsuit charging that the company had knowingly defrauded the government by illegally paying recruiters based on the number of students they enrolled. Federal rules that forbid incentive compensation are supposed to discourage companies from recruiting unqualified students for their federal student aid dollars.