WASHINGTON (CN) – A trade association of for-profit colleges demands documents from the U.S. Department of Education relating to the Government Accountability Office’s recent report “critical of the for-profit college sector,” and information about short-selling of stocks in those colleges. The Coalition for Educational Success claims Congress unfairly singled out profit-making colleges for scrutiny – because the abuses occur at other colleges too.
The Chicago-based Coalition demands a range of documents, including those “relating to the dealing between ED [Department of Education] and various individuals, some of whom are investors who may have ‘shorted’ stock of for-profit colleges, and others of whom [sic] are employed by the not-for-profit sector.”
The Coalition filed the FOIA complaint in Federal Court. It claims to represent “many of the nation’s leading career or for-profit college, serving more than 350,000 students at 478 campuses in 41 states.”
It is particularly interested in documents related to the Aug. 4 GAO report, “For Profit Colleges: Testing Finds College Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.”
The coalition complaints that “the requested investigation was limited to for-profit career colleges even though fraudulent and deceptive abuses that exploit students are no less problematic when they occur at not-for-profit colleges or public institutions, and even though, on information and belief, such abuses occur on occasion at all three types of college.”
The FOIA complaint criticizes Sen. Tom Harkin, D-Iowa, “a prominent critic of the for-profit colleges,” and chairman of the Senate Health, Education, Labor and Pension Committee.
“Senator Harkin never sufficiently explained why he was not interested in an across-the-board, even-hand review of abuses at all colleges, rather than targeting just for-profit career colleges that predominantly cater to minorities, lower income students, and working families, particularly working mothers.
“In the report, the GAO alleges that it found fraudulent or deceptive practices at all 15 for-profit colleges to which it sent its undercover investigators. Yet the GAO has never explained how or why it chose those 15 schools to investigate. Despite repeated requests, the GAO has refused to disclose the documents, including tapes, videos, notes and other documents that underlie its report that would provide the full context for the quotations used in the GAO report.”
The Coalition claims that GAO “has damaged the reputation of the entire sector, consisting of more than 2,500 schools,” though the GAO report focused on “a nonrepresentative sliver of the for-profit sector.”
It also claims that the final GAO report, of Nov. 30, corrected “a series of mistakes” in the original “that skewed its findings to the detriment of career colleges.”
The Coalition also claims that “even rumors” of short-selling stock in for-profit colleges “have caused the decline in such share values and substantial capital losses in the stock market for companies owning career colleges.”
It claims the market capitalization of “the 15 publicly traded organizations that own and operate career colleges dropped nearly $4.4 billion – or about 14 percent.”
The scorching GAO report cited a number of questionable practices at for-profit chain colleges: lying about their certification and the credentials of their employees, canceling classes or entire programs after taking tuition for them, lying about their graduation rates and job placement rates, lying about the ability of graduates to take certification exams in their fields, exaggerating their enrollment, and encouraging students to take as much federal tuition aid and loans upfront, and pay it to the college, before classes begin.
Hundreds of students have filed lawsuits, including class actions, alleging all this and more. Courthouse News has reported these complaints for years, long before the GAO report was issued. The release of the GAO report set off a flurry of shareholder class actions against the for-profit colleges.
The Coalition wants to see the documents. It is represented by Paul Smith with Jenner & Block.