A for-profit college admitted to defrauding students after being sued by the Massachusetts attorney general.
“American Career Institute, a now-closed for-profit institution that operated in Massachusetts and Maryland, admitted to engaging in deceptive schemes and violating state law,” according to Inside Higher Ed.
ACI’s campuses closed in 2013, and Inside Higher Ed noted that more than 1,400 students are eligible for loan discharges.
“Our office has achieved an unprecedented result against a predatory for-profit school that we hope will yield long-overdue relief for thousands of ACI students in Massachusetts,” Attorney General Maura Healey said in a press release.
The consent judgment “is believed to be the first time a predatory, for-profit school has admitted its wrongdoing in violation of state law,” the release noted. “ACI has acknowledged widespread illegal conduct materials, valueless externships, and providing no meaningful career placement services.”
The sins of the for-profit were outlandish.
The school misled students about graduation rates, job placement rates, “altered grades” to bump up averages and move students through programs, and even forged student signatures.
Its career place services, advertised as “for life,” were “no more than links to listings on Craigslist or other employment hiring websites.” Though school policy stated otherwise, “school employees at times told prospective students that employment was ‘guaranteed,’” according to the consent judgment.
Its externships, when the school provided them, “did not require the Students to utilize any skills or training purportedly learned in a school program, but rather, included only photocopying, scanning or other administrative tasks unrelated to and not in furtherance of the students’ education.”
Nor is ACI alone. Healey has filed a lawsuit against ITT Technical Institute as well, and Corinthian Colleges has been responsible for roughly $3 billion in loans to fraudulent colleges.
Many for-profit institutions over-promised and under-delivered, giving students misleading statistics about job placement rates and the economic value of their programs.
Students caught on to the scam before state and federal officials, and enrollments have plummeted for years. A recent study found that students at for-profits ended up worse off than if they had skipped college altogether.
Federal oversight failed to protect students and prevent fraud. Its review system amounted to little more than ensuring that administrators weren’t skipping town with tuition revenue. Much of the increase in student loan defaults have come from college dropouts and graduates of for-profit colleges who couldn’t find meaningful work afterward.
For ACI, the consent judgment leveled more than $25 million in fines and restitution for former students. “However, the amounts are largely uncollectible and suspended as a result of the school’s insolvency,” Inside Higher Ed noted.
“Thousands of defrauded students are now left with millions of dollars of debt and no means to repay their loans,” the Massachusetts attorney general’s office noted.
Nor are those students alone. Fraudulent for-profit colleges were legally accredited and only received the high funding levels through the federal student loan program. In 2012, almost 90 percent of for-profit graduates had student loans, which doesn’t include the students who didn’t complete a degree. Only 32 percent of students at a for-profit institute graduated with a four-year degree within six years, and only 63 percent of students graduated with a two-year degree within three years.
As significant as the Massachusetts lawsuit against ACI is, it sheds light on the failure of the federal government to guarantee quality for students and protect federal funds against fraud.
