For-Profit College Front Group Sues Government

Judge's gavel - for profit collegeA front group representing for-profit colleges owned by Education Management Corp. and others has sued the federal government for "negligence and malpractice" following the release of a highly critical report by the General Accounting Office, the investigative arm of Congress.

The Coalition for Educational Success says the GAO's report, released in August 2010 and then revised in November, is error-ridden, biased and was conducted by inexperienced investigators, among other criticisms. The lawsuit, filed Wednesday, Feb. 2, is the second against the government by for-profit education industry lobbyists in a month.

The Association of Private Sector Colleges, which claims more than 1,500 member institutions, filed a lawsuit in late January against the U.S. Department of Education protesting new federal regulations that would diminish for-profit schools' access to federal grants. Those regulations also include a number of consumer protections, including increased authority for the Education Department to act against unscrupulous behavior.The for-profit education industry includes DeVry, ITT Technical Institute, Kaplan University, Capella University, Argosy University and others that have developed high profiles as a result of multimedia ad campaigns. Some also have established a poor track record among students, as Consumer Ally has previously reported and as a range of Internet gripe sites confirm.

The schools also have been criticized for their marketing methods, which include high-pressure sales, spamming, generating advertorials and bogus review sites, and hiring sock puppets to counter-post against negative online reviews. Some say the "career colleges," as they are branding themselves, are not much better than diploma mills in the eyes of HR recruiters.

The coalition says that's an unfair portrayal, and that the GAO report hit their bottom line substantially. "In the days following the release of the error-ridden August Report, the market capitalization of the publicly traded organizations that own and operate career colleges dropped nearly $4.4 billion -- or about 14%," the coalition's lawsuit says.

"The career college industry was forced to spend substantial sums to respond to the negligent GAO investigation, in an attempt to set the record straight and show how the investigation was unsubstantiated and unfair. The damages suffered by the career college industry continue to accrue because the GAO refuses to withdraw its Revised Report."

Though the coalition has been portrayed in the media as a lobbyist for non-profit schools -- representing "many of the nation's leading career colleges, serving more than 350,000 students at 478 campuses in 41 states and providing training for students in 17 of the 20 fastest growing fields," the lawsuit says -- a substantial portion of its members are properties of Pittsburgh, Pa.,-based Education Management Corp., itself controversial (and subject of a shareholder class-action lawsuit filed the day before the GAO's report was publicly released).

Five Education Management properties make up 48 of the 75 institutions, or almost 60%, listed on the coalition's site: The Art Institutes, Argosy University, Brown Mackie College, South University and Western State University. The coalition site, which is blind-registered to a privacy protection service, doesn't make that distinction, though it does list all of the Art Institutes. Argosy, to name one Education Management property, is the subject of a lawsuit filed in April 2009 claiming unprofessional conduct in its psychology PhD program.

In addition, Argosy, along with for-profit luminaries University of Phoenix, Kaplan University, Medvance Institute, Concorde Career Institute, Keiser University, Sanford-Brown College and Everest College, were served civil subpoenas in November by the Florida Attorney General's office. Following the GAO report, Florida's top law enforcement official wanted to investigate allegations in its state of unfair or deceptive practices in recruitment, enrollment, accreditation, placement and graduation rates.

Beau Brendler is chairman of the North American Internet users' advisory committee to ICANN, and for eight years was executive producer of the WebWatch project at Consumers Union.He also vblogs for Internet Evolution and writes for its Thinkernet.
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