In an unprecedented move for the for-profit higher education industry, Kaplan College in Pembroke Pines has stopped enrolling new students after federal investigators uncovered incidents of high pressure and potentially fraudulent and misleading sales tactics.
A second Kaplan campus in Riverside, Calif., also put new admissions on hold, pending the results of an internal investigation.
Among the incidents uncovered at the Pembroke Pines location, an admissions officer falsely told an applicant that the school had the same accreditation as Harvard and the University of Florida. The officer wouldn’t let the applicant speak to a financial aid representative until she signed an enrollment contract. And he told her not to worry about repaying student loans because "tomorrow’s never promised."
Enrollment in for-profit colleges has grown from about 365,000 to almost 1.8 million in the last few years, federal officials said. In 2009, students at for-profit colleges received more than $4 billion in Pell Grants and more than $20 billion in federal loans provided by the U.S. Department of Education.
During its investigation, agents for the Government Accountability Office posed as applicants at 15 randomly selected for-profit colleges. Using a hidden camera, agents also found potentially fraudulent practices at an unspecified MedVance location in Florida and one school each in Washington, D.C., and California.
"I continue to be amazed by the questionable, and sometimes outright illegal, practices occurring within the for-profit sector," said Sen. Tom Harkin, D- Iowa, chairman of the Health, Education, Labor and Pensions Committee, which heard the report Wednesday. "Critics say that it is only a few bad apples, but we need to take a hard look at the entire orchard."
Kaplan Inc., which is owned by the Washington Post Co., has about 50,000 students in its colleges, universities and online programs.
Kaplan officials said they found the disclosures "sickening." "They violate in every way the principles on which Kaplan is run," said a joint statement from Donald E. Graham, chairman and chief executive of The Washington Post Co., and Andrew S. Rosen, chairman and chief executive of Kaplan Inc. "We will do everything in our power to eliminate such conduct from Kaplan’s education institutions."
Officials said they will take "all necessary actions — including termination — with respect to any employee found to be in violation of our clearly outlined standards and the code of conduct."
In addition to the Pembroke Pines campus, the company has student locations in Plantation, Delray Beach and Jacksonville, although most Florida students take classes online. The company also has a large administrative office in Fort Lauderdale.
The Pembroke Pines campus opened in January 2010 and has about 160 students, company officials said. It offers degrees and certificates in such areas as medical practice management, criminal justice and information technology. Current students at Kaplan schools will not be affected, company officials said.
Officials from MedVance, which is based in Baltimore, could not be reached for comment. The company specializes in training for careers in health-related professions.They have locations in West Palm Beach, Fort Lauderdale and Stuart.
The Governmental Accountability Office reported all 15 schools investigated had instances of questionable sales practices, which some say is an indication of widespread problems within the for-profit sector.
"So many publicly traded companies have incredible unrealistic growth expectations," said David Hawkins, director of Public Policy and Research for the National Association for College Admission Counseling. "Wall Street expects quarter after quarter of growth, so the schools feel pressure to shove in enrollment, and you get an untenable situation."
Federal law prohibits admissions officers from being paid solely by the number of students they enroll, but the law does allow it to be a factor. And experts say it’s a huge factor at many of these schools.
"The admissions officers are nothing but paid recruiters," said John W. Andrews, a Tampa lawyer who has represented some former employees who have sued Kaplan.
The Senate committee said it plans to request extensive documents from 30 companies operating for-profit schools.
The federal investigators have referred the four cases of potential fraud to the Department of Education’s inspector general. The Florida Department of Education also has contacted Kaplan and MedVance, but wouldn’t say whether it’s taking any action, said Sam Ferguson, executive director of the Commission for Independent Education.
Hawkins said he thinks the investigation will lead to reforms in the industry.
The findings concerned Kathy Mizereck, executive director of Florida Association of Postsecondary Schools & Colleges., which advocates for Florida’s for-profit schools. She said she doesn’t think these problems exist at all for-profit schools.
"Whether or not someone feels too much pressure to enroll a student probably depends on the individual," she said. "But there are lines that people should not be crossing. This is a reminder that we need to stay on the right side of the lines."