Significantly Revised Report On For-Profits Seriously Undermines Credibility Of GAO Findings

The Coalition For Educational Success today said that a recently released, significantly amended version, of a Government Accountability Office (GAO) report on for-profit colleges demonstrates the agency’s deeply flawed and biased methodology, and calls into question the credibility and objectivity of the GAO’s analysis. In the new report, GAO revised language in 16 of the 28 "scenarios" used as examples in its original report. In all cases, the original language used in the scenarios was inaccurate and biased against the colleges.

The damaging ramifications of this now acknowledged error-riddled work extend both to the much-publicized hearings by Senator Harkin based upon GAO’s inaccurate work as well as to the U.S. Department of Education’s own gainful employment proposal that specifically cited GAO’s now discredited work. The Coalition has been for some time calling upon GAO and DOE to release all of the tapes and work products leading to the report. The revised GAO report validates the Coalition’s concerns and may be just the tip of the iceberg in revealing a coordinated effort to demonize an industry in the run-up to the Harkin hearings and in support of DOE’s proposed regulation.

“It appears as though, in its first report, the GAO selectively edited or changed the tenor of conversations to make the original report appear more negative. This raises serious questions about the credibility of the GAO’s analysis and process,” said Coalition for Educational Success Spokesperson Lanny J. Davis. “Despite repeated requests, the GAO has not yet released any of the original tapes or transcripts used in the report. It is highly unusual for the GAO to issue an amended report. So, it comes as no surprise that the agency chose to release the corrected version as quietly as possible in the hopes no one would notice, because the amended version stands in shocking contrast to the original.”

The GAO made 16 meaningful amendments to the report, including material changes to the transcriptions of words used by the “undercover applicants” and career college representatives.

For example, in the amended version of the report, “instructions” from college representatives to undercover applicants are now described as “suggestions.” Items previously attributed to college representatives are now reported as responses to suggestions from the undercover applicants.

In one of the most egregious examples, a GAO undercover applicant asked a career college representative to estimate federal aid eligibility without reporting $250,000 in savings to see if the applicant qualified for more financial aid. The earlier version of the report excluded the reference to the applicant’s request.

“The defective and deceptive GAO study is just the latest in a deeply flawed regulatory process that has been biased against the for-profit college sector at every step,” said Davis. “This is the latest example in which the DOE and now the GAO have produced badly flawed data as part of a badly flawed process to develop a badly flawed policy.”

The initial report, which was used by the DOE to inform its “gainful employment” rulemaking, and touted by members of the Senate Committee on Health, Education, Labor and Pensions (HELP) during their attacks on for-profit colleges and support critics’ calls for greater oversight of this specific sector of higher education, was riddled with errors.

The Coalition has asked Congressional oversight committees to investigate the GAO’s apparent ploy to paint a more negative impression of for-profit career colleges. Particularly, Congress should examine tapes, notes, emails and other documentation of GAO and other agency staff involved in the development of the original report and its subsequent revisions.

The August 2010 GAO report, “Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices” contained (by the GAO’s own admission) a number of inaccuracies and errors. The GAO claimed it was reissuing the report to “clarify and add more precise wording.” However, a closer examination of GAO’s amended report reveals a series of mistakes in the initial analysis that skewed its findings and portrayed a colored picture of career college recruiting and marketing activities.

“The number of amendments made to this report, shakes the very foundation of the GAO’s integrity,” said Davis. “There appears to be a pattern of intentional errors that skewed the report’s initial results. In fact, where there are differences between the two versions of the GAO report, it is clear that the initial report was modified – without any factual basis – to make the GAO’s statements seem more negative toward for-profit career colleges.”

The initial GAO report was widely covered by media and used by critics to attack for-profit career colleges. The report was commissioned by the Senate HELP Committee and used by Senator Harkin as the centerpiece for a one-sided hearing that called for additional regulatory oversight of career colleges.

The reputational fallout from the report and the Senate hearing significantly damaged the career college sector. In the days following the release of the report, the market capitalization of publicly traded for-profit colleges declined 13.8 percent, representing a $4.3 billion loss in the value of the sector.

In November, Senators Richard Burr and Tom Coburn called for a DOE Inspector General investigation of contacts between DOE officials and known Wall Street short-sellers looking for financial gain from the regulations. Earlier, Representative John Kline, current ranking member of the House Education and Labor Committee, along with a bipartisan group of members wrote to the GAO, expressing concern about the narrow scope of the original report and asking for a larger study that focused on all of higher education. Questions have also been raised about the bias of a key panel selected by DOE to negotiate the proposed regulations – only one representative of for-profit colleges was among the 17 members of the group.

“Senator Harkin and others who touted the original version of the GAO report now owe it to the career colleges and the public to acknowledge the significant issues surrounding the overall credibility of this study,” said Davis.

About the Coalition for Educational Success
The Coalition for Educational Success includes many of the nation’s leading career colleges, serving more than 350,000 students at 478 campuses in 41 states. Career colleges provide training for students in 17 of the 20 fastest growing fields. The Coalition advocates for policies that support wider access to higher education, particularly for non-traditional students including full-time workers, workforce returners, working parents, minorities and veterans.


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