For-Profit College Group Sued as U.S. Lays Out Wide Fraud | Hacker News Reader

For-Profit College Group Sued as U.S. Lays Out Wide Fraud

nytimes.com

51 pointsnighthawk16 comments

"Education Management, which is based in Pittsburgh and is 41 percent owned by Goldman Sachs"

Excuse my french but holy fucking shit. Is there anything these scumbags DON'T have their hands in? Energy, Finance, Housing, now we find out about Education.

What's it going to take to arrest these people already? How many people have they screwed over in their never ending quest for pure profits?

Easy answer: You forgot "Government."

The financial industry represents a third of American corporate profits. Goldman Sachs is the most prominent player in the financial industry. Like Britain, the US is quickly becoming simply a hedge fund, with a government attached. With practically no constraints on corporate money entering politics and voters perpetually responsive to political advertising, I wouldn't hold your breath waiting for politicians to seriously take on the most powerful, influential industry in the country, by far.

>voters perpetually responsive to political advertising

Maybe not anytime soon, but perpetually?

"Perpetually" means "always, continually." US voters are very reliably responsive to political advertising; media campaigns seldom fail to swing opinion in the direction they want to.

As soon as I saw Goldman Sachs, I thought, "oh great, not again". I see them in the news so much and always with some sort of activity that appears should be illegal yet nothing ever comes of them. What gives?

The problem is not for profit colleges, the problem is guaranteed government loans to anyone who goes to college. This is exactly what happened with the housing bubble. You have a government entity (in the housing case it was Fannie Mae and Freddie Mac) that's giving out money without any checks and balances.

So as a result you get a few amoral businesses who buy up colleges that have regional accreditation and balloon their enrollment with online programs in order to collect the free money being handed out by the government. This shit only works as long as you have a blank cheque issued by the government to anyone who goes to a regionally accredited college.

The solution is not to clamp down on the only bit of free enterprise that still exists in higher education. The solution is to let the market price the risk/value of college degrees.

> You have a government entity (in the housing case it was Fannie Mae and Freddie Mac) that's giving out money without any checks and balances.

Except there is checks and balances, otherwise they'd be unable to sue.

The problem is not for profit colleges, the problem is guaranteed government loans to anyone who goes to college.

1) It is hard to claim that for-profit colleges aren't part of the problem. They clearly have more of an incentive for this kind of a fraud (though other schools might have some incentive).

2) For profit colleges have expanded primarily based on student loans. Without student loans, indeed for-profit colleges wouldn't be a problem but mostly because they wouldn't exist.

They clearly have more of an incentive for this kind of a fraud (though other school might have some incentive).

Could you explain this statement?

Also, many non-profit colleges (including plenty of schools as bad as any for-profit) also would not exist without student loans and other govt subsidies.

Did you watch College Inc. too? Good documentary.

> The solution is to let the market price the risk/value of college degrees

How would you get close to that market price, while still supporting those who will not be able to afford college? Surely tuition fees will increase in line with the maximum of any form of government supported loan.

There are a lot of parallels with this and the 2008 housing bubble. The recruiters are just trying to get as many students to enroll as possible, they don't care whether or not the students can actually afford the loans. They are just a bunch of scumbags that prey on people that are trying to get an education. As those jerks are making money hand over fist, tuition at state run universities is going up like crazy, even as they are having to cut tons of programs.

I hope the US government cleans them out.

Actually, the US government is helping them out.

Guaranteed loans? I'll take 3 please.

Frontline had an interesting documentary on this industry a year or so back called "College Inc". If I remember rightly, they even discussed one of the schools named in the suit, Argosy University (along with a lot of hard-sell tactics and high student loan default rates that accompany the for-profit industry).

It was an eye-opening program. Here's the link if interested: http://www.pbs.org/wgbh/pages/frontline/collegeinc/view/

I think Netflix also has the episode available for online streaming.

Any time you have a massive government subsidy to an industry, people will eventually line up to scam it.

In this case, it's a shame because there are a lot of innocent bystanders who get scammed. In addition to the taxpayer footing the bill by providing lower cost loans, people graduate the schools with worthless degrees.

I am a big fan of charter schools, and in theory support for-profit colleges, but I wish I had more data points on where they succeed. Perhaps there will be a collegiate disruption similar to Khan Academy.

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