Questions Follow Leader of For-Profit Colleges

[alp227]

Source: The New York Times

In 2004, when Todd S. Nelson was chief executive of the University of Phoenix, the nation’s largest for-profit college, he signed a $9.8 million settlement with the Department of Education, which found that Phoenix had “systematically and intentionally” broken the federal rules against paying recruiters for students.

Mr. Nelson is now chief executive of the nation’s second-largest for-profit college company, Education Management Corporation, or EDMC, and the Justice Department and two state attorneys general are intervening in a whistle-blower lawsuit charging that EDMC also violated the ban on what is known as incentive compensation. That practice encourages aggressive recruitment of unqualified students for their federal student aid.

Given the cast of characters — along with Mr. Nelson, a half dozen former Phoenix executives are now at EDMC — the complaint against EDMC says that “senior management knows that the compensation system it administers violates the incentive compensation ban.”

Phoenix never admitted any wrongdoing, either in the settlement with the Education Department or in a later $78.5 million settlement in the whistle-blower suit that had led to that inquiry. Education Management, which enrolls about 150,000 students at Argosy University, Brown Mackie College, South University and in its Art Institutes, has said it plans a vigorous defense.

Read more: http://www.nytimes.com/2011/05/27/education/27edmc.html?partner=rss&emc=rss&pagewanted=all

[Hannah Bell]

1. The real scandal is that congress & the feds are enabling these rip-off joints.