The for-profit education industry complained of excessive regulation last fall when the Obama administration issued new rules intended to curb abuses at profit-making colleges and trade schools. But lawsuits brought by whistle-blowers with firsthand knowledge of the industry make a strong case for why tough rules are needed.
Earlier this month, the Justice Department took the unusual step of joining a lawsuit brought by former employees of the Education Management Corporation, one of the largest for-profit college companies in the country. The employees charged that the company knowingly defrauded the government by illegally paying recruiters based on the number of students they enroll.
The court papers describe a “boiler room” atmosphere in which recruiters enrolled students who stood no chance of graduating and saddled them with debt they were unlikely to be able to pay off. They say the academic requirements laid out in Education Management’s advertisements were a sham and that the company accepted all students who completed applications and submitted 150-word essays.