For-Profit Schools Hit With New Rules

One of the bigger scandals in higher education throughout the past few months has been the accusations by, amongst others, Steven Eisman (famous for his portraiture in Michael Lewis' The Big Short), who claimed that many of the nation's for-profit institutions (such as the Apollo Group's University of Phoenix) were rife with corruption and fraud.

If the notion of fraud existing at a university is bewildering, one must remember that these institutions are not in the same playing field as community or private colleges. Most of those centers for learning have non-profit status. However, the University of Phoenix, the biggest for-profit with approximately 400,000 students, is run by a publically traded company that must make its stockholders happy. The tension between focusing on students versus the company has apparently led the organization into undertaking some ethically unsound practices, such as lying about its programs' accredidations or the average salaries of its students post-degree.

A recent report from ABC news followed the tragic story of Melissa Dalmier, 30, from Illinois, who enrolled in the University of Phoenix in the hopes of becoming an elementary school teacher. Shortly after beginning her studies, she learned that the degree would not qualify her to become a public school teacher. She claimed the whole case was a lie, so ABC news investigated the issue further:

Much of the rise in government loans for for-profit students has come as a result of the recent recession, which has driven millions out of jobs and into searching for new career opportunities. For-profit companies have seized this opportunity through massive online marketing campaigns, which have lead to increasing requests for student loans.

Because of its substantial stake (over $26 billion) in this growing sector of the higher education market, the U.S. government immediately jumped at claims of widespread fraud in the industry. During the summer, numerous hearings were held on Capitol Hill in which victims were given the opportunity to tell their revealing tales. One such tragedy was that of Yasmine Issa, who spent $15,000 only to realize that her program was not accredited. In response to calls from students, lawmakers and the media to, the Education Department has recently announced 14 new regulations that it hopes can curb the worst of the abuses.

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