Mass. investigating top for-profit college

AG demands University of Phoenix data on recruiting, finances

By Todd Wallack
Globe Staff / May 17, 2011

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The state’s growing investigation into the for-profit college industry now includes the country’s biggest player, the University of Phoenix.

The chain’s parent corporation, Apollo Group, which is based in Phoenix, yesterday said it has received a demand for information about its recruiting and financing practices from Massachusetts Attorney General Martha Coakley.

She recently sent similar requests to Kaplan Career Institute in Boston, owned by The Washington Post Co., and the Everest Institute campuses in Brighton and Chelsea, which are owned by Corinthian Colleges Inc.

The University of Phoenix is the largest for-profit college in the country, serving more than 400,000 students at more than 200 US campuses, including three schools in Massachusetts. Last fiscal year, it reported $4.5 billion in revenue, mostly from federal student grants and loans.

In documents filed with the Securities and Exchange Commission, Apollo said Coakley’s office is looking into whether for-profit educational institutions used unfair or deceptive practices in the recruitment of students and the financing of their educations. The company was asked to provide nine years’ worth of detailed information about its Massachusetts operations.

In a statement, the school said it was reviewing the letter but is proud of the education it provides.

“Apollo Group is committed to being a leader in higher education and setting the gold standard in transparency, accountability, and robust student protections,’’ said Chad Christian, a company spokesman.

State and federal officials across the country are investigating whether for-profit schools used high-pressure or fraudulent tactics to recruit students. The office of Kentucky’s attorney general, Jack Conway, said it is leading an 11-state investigation. Coakley’s office declined to comment.

The Government Accountability Office last year found recruiters at 15 schools gave deceptive or questionable information to investigators posing as prospective students. Many students have complained the schools did little to prepare them for jobs, leaving them unable to pay their student loans.

“We have lots of indicators that the problems are systemic,’’ said Pauline Abernathy, a vice president for the Institute for College Access & Success, an advocacy group in Oakland, Calif.

The for-profit school industry has exploded in recent decades as students increasingly look for specialized training to land jobs. According to federal data, there were more than 3,000 for-profit schools serving at least 1.8 million students in 2008.

But students at the schools tend to graduate with higher debt and be more likely to default than those at nonprofit and public schools, federal data show. Though for-profit schools account for 10 percent of college students, they account for about half of all student loan defaults, Abernathy said.

The US Department of Education recently imposed new restrictions on recruiters and proposed rules to cut off federal student aid from schools with the worst repayment rates.

For-profit schools said the statistics are skewed because they serve poorer and older students, who might have more trouble paying back their loans. They also insist they serve a vital niche of providing specialized training to students who are not served by other schools.

Rebekah Mroz, a 22-year-old single mother, recently sued Sullivan and Cogliano Training Centers Inc. in Brockton, claiming it falsely promised to train her to become a certified medical assistant. For example, the lawsuit said, an admissions officer assured Mroz she would receive training in drawing blood and other medical tasks.

But the school never provided live instruction, just coursework on a computer supervised by a proctor, according to the lawsuit. When Mroz asked about learning to draw blood, she said she learned that the program was actually for people who want to become an administrative assistant in a medical office.

“They advertised a training program that they didn’t teach,’’ said her attorney, Marian H. Glaser of Boston.

Glaser said Mroz was stuck with $6,500 in student loans.

In March, a Plymouth Superior Court judge, Robert C. Cosgrove, rejected the school’s request to dismiss the suit, ruling in part that the school’s ads “possessed a tendency to deceive readers.’’ According to the suit, the Council on Occupational Education, a regional accrediting agency, also ordered the school to stop advertising that it offers training for medical assistants.

The school’s attorney, Steven Kramer of Wellesley, acknowledged the ads were problematic, but said the school moved quickly to correct them. And Kramer said that both the admissions officers and the forms Mroz signed made it clear she was enrolling in an office program.

Todd Wallack can be reached at