U.S. Opens New Front in Fight with For-Profit Colleges

As students prepare to go back to school, a long-simmering dispute between government regulators and the for-profit college industry has boiled over, with a lawsuit charging that one of the major players engaged in a giant fraud.

Last Monday, the Department of Justice filed a complaint against Education Management Corp. (EDMC), marking the first time the federal government has gotten involved in one of many cases against such for-profit colleges.

The move represents an escalation in a battle against for-profit colleges, which have been targeted because they are funded largely by students with federal loans, who are far more likely to default than students at non-profit colleges and universities.

The complaint against EDMC, which operates schools in 105 locations under the names such as Art Institute, Argosy University, Brown Mackie College and South University, alleges the company paid its recruiters based on how many students they enrolled.

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