From the U.S. Government Accountability Office, www.gao.gov Title: For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive Practices Description: Selected video clips from GAO’s undercover applications at for-profit colleges across the United States. Clips show examples of fraudulent, deceptive, and questionable marketing practices used by admissions and financial aid personnel, as well as examples of helpful advice given. Associated Publication Number: GAO-10-948T Issue Date: 08/04/2010 Example 1: School Representative Tells Student That There Are No Employment Guarantees (Illinois) [ Student: ] So is employment, like, guaranteed? [ Admissions Representative: ] No. [ Student: ] It’s not guaranteed? [ Admissions Representative: ] That I can not say. [ Student: ] Ok [ Admissions Representative: ] Any school that says that to you is uhhhh….is uhhhh… gets the Pinocchio award. Example 2: School Representative Tells Student That There Are No Employment Guarantees (Illinois) [ Student: ] So, check--I'm sure that it covers a lot of stuff like, I don’t know if you have (job) placement services and this kind of stuff. [ Admissions Representative: ] We'll talk about that later. We do not have job placement. [ Student: ] Ok. [ Admissions Representative: ] We can't guarantee that at all. I mean in this economy, I don't think anyone that does guarantee it can really even guarantee it. [ Student: ] Yeah. Example 3: School Representative Suggests Student Should Decrease Her Loan Debt By Returning Unneeded Funds (Washington, D.C.) [ Financial Aid Representative: ] (reading) “If I withdraw from [beep] college, I request the college return any credit balance on my account to the appropriate lender to reduce my loan debt.” Obviously you want that to happen. I would want that to happen, it's your decision. If you don't authorize to do that, then we would send it (excess student loan balance) to you. But I think it's more beneficial to send it back to your lender to reduce the loan debt. Example 4: Financial Aid Counselors Assisted Students in Committing Fraud Clip 1: Financial Aid Counselor tells student with $250,000 in the bank that he should not report that money on his FAFSA, counter to Department of Education requirements (Texas) [ Financial Aid Representative: ] Is there a reason why you put this amount in for cash? [ Student: ] I got an inheritance last year. My aunt passed away. And that's why I thought, well maybe I can go to school now. Does it--does it affect anything? [ Financial Aid Representative: ] Yeah. Frankly, in my opinion, they don't need to know how much cash you have. That's why you don't have to return anything. [ Student: ] Oh, I didn't--I didn't know. [ Financial Aid Representative: ] Yeah, just an FYI, they don't need to know your cash. [ Student: ] I didn't know. [ Financial Aid Representative: ] Yeah. [ Student: ] I was just filling out the (FAFSA) form. [ Financial Aid Representative: ] Yeah and a lot of people are--honestly answer it and that's fine, but if you're doing it up here at the school I pretty much tell them, that's why you have a tax return. Clip 2: Financial Aid Counselor tells student that if he increases the dependents in his household, he can qualify for Federal Pell Grants (California) [ Financial Aid Representative: ] Your EFC (Expected Family Contribution) is high, you won't qualify for a grant I can tell you that much. [ Student: ] Oh man. [ Financial Aid Representative: ] Government do have a thing that we call special condition. [ Student: ] Ah-huh. [ Financial Aid Representative: ] Meaning, if there's something going on in your life at this point…that will reduce your income from last year to this year. So we can go back in and say, well, this was what happened in '09. [ Student: ] Yeah. [ Financial Aid Representative: ] 2010 is gonna be totally different. [ Student: ] Oh yeah. No, I don't know of anything. [ Financial Aid Representative: ] You're not supporting anyone else? Or Anything? [ Student: ] No, I'm not. Uh-uh. [ Financial Aid Representative: ] So now if we go back in and say ok you make $30,000 and you're claiming a couple of people... [ Student: ] Ah-huh. [ Financial Aid Representative: ] Yeah. [ Student: ] Oh yeah. [ Financial Aid Representative: ] And with the economy it’s understandable, because people have to move in with other people, you know. [ Student: ] Right, right. I don't do anything to FAFSA, I just turn this into you? [ Financial Aid Representative: ] Turn it in to me and then I'll make the corrections (to the FAFSA) according to what you're telling me. [ Student: ] Ok, alright, I appreciate that. So that would be like $5,000 I get for Pell grants and then-- [ Financial Aid Representative: ] Approximately, uhhh…with two people…with two kids and you, would be three people, you might not get the whole $5,000 but you would get over $4,000 I would say. Example 5: School Representative Overstates Earning Potential (Washington, D.C.) [ Admissions Representative: ] Now think about this. Haircuts are now, how, I’ll say $20, $20, yeah, $20-$25. Now think about it, if you have 3 people who came into the shop at $25, that's $75 an hour. And if you work 8 hours and if you have 3 people coming in for those 8 hours at $25, I would say 75 times 8, that's like $600 a day. $600 a day, and that's just on the low end. We have some students who are making maybe $600, $700, $800, maybe a $1,000 a day. Note: At $600 to $1,000 a day, our barber would earn $150,000 to $250,000 per year. According to the Bureau of Labor Statistics, in Washington, D.C. 90 percent of barbers make less than $19,000 per year. Example 6: School Representative Overstates Earning Potential (Florida) [ Representative: ] I think you would be awesome in the medical field, like a medical assistant. They start out at like, I'm not supposed to discuss salaries, but they start out at like $38,000, $40,000. You can get specialized in different fields, say you specialize in each field but each specialization, you're gonna make more money. So I know medical assistants that are making $68,000, $69,000 a year. And they're only in school for 9 months. Note: According to the Bureau of Labor Statistics, in Florida 90 percent of medical assistants make less than $39,000 per year. Example 7: School Representative Suggests to Student that Student Loans Do Not Have to Be Repaid (Florida) [ Admissions Representative: ] Most doctors are walking around with over $250,000 in student loans...but it's workable, you know, it's really workable. And the…a lot of people have student loans...but the best thing about it, it's not like a car note, where if you don't pay they're gonna come after you. Example 8: School Representative Suggests to Student that Student Loans Do Not Have to Be Repaid (Florida) [ Admissions Representative: ] You gotta look at it - I owe $85,000 to University of Florida. Will I pay it back? Probably not. I look at life a little differently than most people. I look at life as tomorrow is never promised. [ Student: ] Mmm-hmmm. Note: Students who default on their loans face fees, damage their credit, have difficulty taking out future loans and, in most cases, bankruptcy law prohibits a student borrower from discharging a student loan. Example 9: School Representative Misrepresents the Value of the Program (California) [ Student: ] Yeah, I was a little concerned about the cost, but I feel a lot better now. [ Financial Aid Representative: ] Well, the cost is not… [ Student: ] When she said $14,000, oh man. [ Financial Aid Representative: ] Oh. [ Student: ] I didn’t want to hear that much. [ Financial Aid Representative: ] When you compare it to the other school, the cost here is really low. Note: The same certificate at a local community college would cost a student approximately $520—roughly 4 percent of the cost of attending this for-profit college. Example 10: School Representative Misrepresent the Value of the Program (Texas) [ Student: ] What's the cost (for the program)? [ School Representative: ] It depends on the program. Usually with a bachelor's program, coming in with no college credits, this could be--it could range from $50,000 to $75,000. Most schools, more traditional schools, you're looking at about $100,000 to $150,000 to $200,000. Note: To obtain the same degree from the state’s flagship University would cost the student $36,000. Example 11: “Lead Generator Calls” >> Hi, this message is for Amy. This is… >> Hi, Amy. I'm very excited. >> Hi, Amy, I like to speak with… >> Hello, this message is for Amy. Amy, this is-- >> Hi, Amy. A great coach in… >> Hi, Amy. This is Gina from… >> Hi, Amy. This is Frank from Jones… >> Hi, Amy. This is Rebecca with… >> Hi. This message is for Amy Myers. >> Hello. This message is for Amy Myers. >> Hi. This message is for Amy Myers. >> Hi. This message is for Amy and-- >> Hi. This message is for Aimee. My name is-- >> Hello. This message is for Amy. >> Hello, Amy, this is Scott. >> Hi, Aimee. This is Brooke from… >> Hi, Amy. This is ……. Example 12: For-Profit Colleges Engaged In Aggressive Sales and Marketing Tactics (Texas) [ Admissions Representative: ] and then just sign and date right there for me. [ Student: ] Okay. Now, I'm not signing up for the school right now? [ Admissions Representative: ] Yeah. You're actually reserving your seat. [ Student: ] Oh. You know, I really need to see--figure out the money thing first. I was hoping I could talk to the financial people first. [ Admissions Representative: ] No, they won’t even let you back there. [ Student: ] Am I--I mean…I’ll be on the hook for the $38,000? Or--I mean… I mean…. [ Admissions Representative: ] Let me ask you something (raises hands in “time out” motion)—are you real serious about the program? [ Student: ] Yeah--yeah, I am. [ Admissions Representative: ] Ok. [ Student: ] But I wanna see if I get any grants or anything. [ Admissions Representative: ] Well, you're gonna be able to see that once you get back there (financial aid), but if you're real serious… [ Student: ] That's why I was kind of hoping to talk to a financial person to see how much my payments would be and so on. Can they kind of like, walk me through it first? [ Admissions Representative: ] I know you're nervous. [ Student: ] Yeah. I was kind of hoping your financial people could say, "Alright, here's your total loans and here’s how much your payments are… [ Admissions Representative: ] Yeah. They're gonna be able to do that when you get back there, but they're really not going to be able to sit down and go over everything with you if you're not willing to reserve your seat 'cause there's-- [ Student: ] Well--I mean, I'm willing to reserve a seat, I just need to see how much the payment is gonna be first. You know, I mean… [ Admissions Representative: ] Ok. Example 13: For-Profit Colleges Engaged In Aggressive Sales and Marketing Tactics (Florida) [ Admissions Representative: ] This is your contract, your blood contract, no this is your enrollment agreement. [ Student: ] Is there any way I could talk to the, they can run my Pell Grant stuff first…to tell me, how much can I get in loans and stuff and how much comes out of my pocket first? [ Admissions Representative: ] No. Actually out of pocket, I don’t think there’s anything right now out of pocket. [ Student: ] Ok. [ Admissions Representative: ] It will be done 6 months after you graduate. [ Student: ] No, but I mean, like um, how much of this total, you know, is—can I get loans for…how much can… [ Admissions Representative: ] Absolutely. My question to you is why is right now this is a concern? Why are you concerned right now about the whole… [ Friend: ] Oh, we didn't quite understand the FAFSA thing, and if he qualifies for any grants or doesn’t, or like how much the loans are gonna be and so on. We were gonna like compare the --these payments to this new income and so on and kinda sit down and chew it over. Kinda hoping…I mean… that's kind of one of the reasons we came. [ Admissions Representative: ] You're just too concerned about it. Can you see him (financial aid representative) right now? [ Friend: ] Oh, Ok. [ Student: ] Can we go see him (financial aid representative)? [ Friend: ] Let’s go do that. [ Admissions Representative: ] After we do this (enroll in the school). [ Admissions Representative: ] But I thought you wanted to make a change? I’m confused. [ Admissions Representative: ] Let me see what I can do, give me one second. But here’s the thing…I thought you wanted to really do this? [ Friend: ] Well, we do, we just, (laughs) want to know what the cost is going to be. You know, and see what the payments are going to be. Example 14: Instead of Bringing Back a Financial Aid Officer, the Representative Returns with His Supervisor [ Admissions Director: ] Okay. So we went from 100 percent right about to what? [ Student: ] We wanted to talk to somebody…to run my…see if I can get any Pell Grants, something like that, right. [ Admissions Director: ] Right. [ Student: ] So we were thinking, let’s go crunch the numbers and stuff and… [ Admissions Director: ] Ok, but here's the thing. You are not a financial aid expert. [ Student: ] Yeah, that's why we want to talk to someone, before we sign anything. You know, I'm kinda—let’s go. [ Admissions Director: ] You owe it to yourself, finish your paperwork, apply to the school. This is your admissions and application process. [ Student: ] No [ Admissions Director: ] There's a lot of different things that they're going to expose you to that you're gonna be able to take advantage of. Believe you me…no one here has not gone to school because of financial aid. Don't you be the first. There's a lot out there that's gonna make it doable for you. Is it gonna be cheap? No. Is it gonna be hard? A little bit, but there are certain sacrifices that we as individuals need to make if we really wanna get to the end result. It's up to you. But you know what…if you're this hesitant as to signing your admission paperwork, then you're not ready to take that step. You haven’t made this amount of an investment ever, especially in yourself. [ Student: ] Ever. Yeah. [ Admissions Director: ] Especially in yourself. [ Student: ] Yeah. [ Admissions Director: ] So, honestly, I gotta tell you, I totally understand your concern, but I really, with all due respect, I don't believe you're ready to take that step, period. That paper could say $40,000. And in your situation, and at your stage in life, you should be ready to make your investment of time and money necessary to get you to where you should be at this point. But you’re not. And we're trying to help you get there and trying to help you… understand it, but there’s… What are you really afraid of? There has to be something more. [ Student: ] We can discuss this now. We can say hey, you know, this is, you know, the worst case scenario if you don't get any grants…you can get some loans and they'll cover some of it, and then… [ Admissions Director: ] (ripping up student’s application) You’re social’s on it, I don’t want you to be concerned. [ Student: ] Yeah. And you might have to come up with this payment.