for-profit education

For-Profit Education and Consumer Rights

Finding the motivation and resources to attend college is an admirable pursuit and one that students go into with high hopes. But while the investment in post-secondary education pays off for most students in traditional schools, many are lured into enrolling in for-profit “career” colleges that provide much less value, while costing much more.

There are several reasons why this may be the case. For one, for-profit schools have lower graduation rates than traditional schools. Students that graduate often leave with more debt, lower earnings, a higher chance of unemployment, limited ability to transfer credits or pursue higher degrees, and lower overall satisfaction.

Although students are not typically a group we consider to be consumers, they do purchase a product – an educational program —  whether or not that product functions as it should. Legally speaking, this means that students have rights under consumer protection law. The Consumer Financial Protection Bureau, the Federal Trade Commission, and state Attorneys General have all conducted investigations in the for-profit higher education sector, revealing widespread use of unethical and illegal practices that harm students.

The following are types of predatory behavior by for-profit colleges that our attorneys have experience evaluating and litigating.

Aggressive Advertising Tactics

As reported by the Brookings Institution, for-profit colleges account for 40 percent of all college advertising dollars, even though they serve just 6 percent of students. Additionally, for-profit colleges spend four times more on advertising per student than nonprofits1.

This extra advertising often targets low-income communities, people of color, and women, who tend to be economically disadvantaged. These populations may be repeatedly shown ads telling them to invest in themselves by enrolling in a new school or to trust in a college program that can guarantee them a path to a high-paying job with economic security.

Misleading Job Placement Rates

As part of their manipulative marketing strategies, many for-profit colleges dramatically exaggerate their job placement rates. Promotional materials for tech sales bootcamp Prehired, for example, advertise a “job guarantee”, with 96% of program graduates placed within six months. Dozens of Prehired graduates have since taken to social media to exclaim that those rates couldn’t be further from the truth2.

Promising job placement numbers may be inflated, and they don’t necessarily reflect the minimal role that college had in a student finding a job, or the fact that some graduates ultimately find work in areas that do not require a degree. For example, a lower-quality school may count getting hired at a retail store as a “placement,” even if that student studied a completely unrelated field such as hospital administration.


Unsubstantiated Claims

In a professional environment where a college degree has become increasingly important for career advancement, for-profit schools advertise flexible schedules and valuable credentials. In many cases, these advertisements promise unrealistic outcomes to prospective students, including misrepresentations about the specific companies or types of companies where graduates are likely to work.

In a lawsuit filed in 2019, the Federal Trade Commission alleged the University of Phoenix misled consumers by claiming its students would have career opportunities with national employers such as Microsoft, AT&T, Twitter, Yahoo!, and the American Red Cross. Defendants settled the case, agreeing to pay $50 million in direct payments to some students and cancel an additional $141 million in loans that other students owed directly to the school3.

Outrageous Tuition Costs

People who don’t have the time or money to attend a four-year college or university may consider for-profit schools as an option because of their flexible hours and the ease of getting a loan. Nevertheless, when the time comes to pay, the tuition at these schools sets students back significantly more than tuition at a nonprofit institution.

CollegeBoard estimates that the annual tuition and fees for a public two-year, in-district school were $3,730 in 2019-2020. In-state tuition for a public four-year school was $10,440. In comparison, for-profit colleges charged $14,600 annually in tuition4.

Even with its history of poor performance and outright fraud, the for-profit education sector has grown to consume an enormous share of federal financial aid for higher education. For-profit institutions have received almost one-quarter of federal grants and loans in recent years and have grown into a $30 billion-plus per year industry5.

Lower Quality Instruction

The Century Foundation found that for-profit schools typically spend less than half of their revenue on student instruction, whereas nonprofit colleges tend to spend more on instruction than they take in from tuition. For every tuition dollar that for-profit colleges collect, they spend just 29 cents on student instruction, compared to 84 cents at private schools and $1.42 at public universities6.
Facing this lack of investment, compounded by for-profit schools’ heavy spending on marketing, students are the ones who lose out.

Credits May be Difficult or Impossible to Transfer

As for-profit colleges become more popular and accessible, enrollment is at an all-time high. However, when students try to transfer schools, they are often informed that the credits they have earned at a for-profit college cannot be applied to a degree at a non-profit institution. Many would-be transfer students have been denied transfer credits, forcing them to begin their educational journey from scratch.

Before enrolling at a for-profit school, be sure to read the fine print. Determine if the school is accredited, and by which organization. Ask if your credits earned can be transferred to other schools (and then follow up with these schools to ensure that they will accept them).

Victims of Education Fraud May Have Legal Options

Through predatory, deceptive, and even illegal practices, the for-profit college industry has made billions of dollars by targeting vulnerable communities. They have left their students with crippling debt, poor employment opportunities, and years of wasted time. If you attended a for-profit college and have been deceived, contact us to speak with our experienced consumer protection attorneys.