Interesting lawsuit against for-profit college
Former employees of the Premier Education Group, a company operating for-profit colleges, have filed a whistleblower lawsuit under the federal False Claims Act.
The suit contends that while charging more than $10,000 for programs lasting less than a year, school officials routinely misled students about their career prospects, and falsified records to enroll them and keep them enrolled, so that government grant and loan dollars would keep flowing.
. . .
The former employees’ federal suit also charges that the school enrolled people who should not have been in its programs — like a student enrolled for massage therapy, though he had been convicted of a sex crime, which would prevent him from being licensed. They say the schools enrolled students who had not graduated from high school, though their programs required it, including some who presented diplomas from known fraudulent “diploma mills.”
Will the truth come out?
And ponder this:
For-profit schools also spend heavily on advertising, their students are far more likely to borrow money to pay for tuition, and those who borrow rack up more debt and are more likely to default.
Students at for-profit schools often do not realize that cheaper alternatives exist through public community colleges and trade schools. A study published this month found that the majority of people who had attended for-profit colleges and trade schools did not understand the distinction, learned of their schools through advertising and did not consider any other schools.
So we see that (1) a large percent of the tuition paid by the students (or paid by the federal government in the form of student aid) goes to cover the cost of advertising; and (2) the majority of students attending for-profit colleges don’t even realize they are crappy for-profit schools, and don’t know that community college will provide education for a lot less money because the community colleges don’t advertise.
While libertarians will defend these crappy schools, the reality is that they create no value. They prey on people who are too stupid to realize that they are being ripped off, and they wouldn’t even have a profitable business model if it were not for government aid.
Sisyphean writes in a comment:
It’s the PT Barnum school of sticking it to the suckers. What’s more American than that? It’s not like smarter people have any obligation to protect the fools in the middle of the bell curve. Though if people were wise as well as smart they might understand that the suckers only suffer so long before they re-purpose their pitchforks. But hey, those days are a long way off as long as people can still eat pizza and watch honey boo boo… right?
I disagree with both points.
(1) Because of the modern welfare state, the taxpayers wind up paying for the suckers who get ripped off, so it’s in our self-interest to prevent them from being ripped off. I would also point out that the relatively recent laws that prevent student loans from being discharged in bankruptcy adds to the problem. Prior to such laws, the suckers wouldn’t be able to dig themselves into a hole because they could escape via bankruptcy, and no one would lend them any money anyway because they’d know that it probably would never be paid back. Federal guarantees of student loans makes the whole thing possible.
(2) There’s no one to organize the serfs into a pitchfork-wielding army because all the smarter serfs have been absorbed into the middle class. This is the same reason why unions are a lot less powerful these days. The smart people who used to organize people into joining unions are no longer around in the low-wage blue collar jobs, or if they are they buy into the dream that they will move up any day now so they don’t have a long-term interest in fighting for a social class they assume they are going to leave behind.