For-Profit Colleges Allow Cheating, U.S. Says

Seven of 12 for-profit colleges attended online by undercover U.S. investigators violated school policies on cheating, grading standards and loan counseling, a report by the Government Accountability Office found.

One or more instructors at two colleges repeatedly noted that the students were submitting plagiarized work, yet took no action, according to the agency, Congress’s investigative arm. One student submitted photos of celebrities and political figures to reply to an essay question and earned a passing grade, the report said. The GAO didn’t name the colleges.

Congress, the Department of Education and the Justice Department are scrutinizing the recruitment practices, student- loan defaults and quality of for-profit colleges, which include Apollo Group Inc. (APOL), operator of the University of Phoenix, the largest chain by enrollment. For-profit colleges received almost $32 billion in federal grants and loans during the 2009-2010 school year.

“The findings of this report underscore the need for stronger oversight of the for-profit education industry in order to ensure that students and taxpayers are getting a good value for their investment in these schools,” said Senator Tom Harkin, the Iowa Democrat who chairs the education committee, which requested the report.

Apollo, based in Phoenix, rose 0.2 percent to $44.89 at the close in New York. The Bloomberg U.S. for-profit education index (USEDU) fell 0.2 percent.

Unsolicited Complaints

The report reflects “only a tiny fraction” of for-profit schools, said Brian Moran, interim president of the Washington- based Association of Private Sector Colleges and Universities, which represents for-profit colleges.

“The overwhelming majority of schools in the private sector have proven invaluable” in preparing students for jobs, Moran said in a statement.

The GAO, which conducted its investigation from October 2010 through October 2011, selected the five largest for-profit colleges based on fall 2008 enrollment, according to the report. One was chosen based on unsolicited complaints and the rest at random.

Enrollment data for that year wasn’t immediately available. After Apollo, the biggest publicly traded for-profit college chains by enrollment currently are Pittsburgh-based Education Management Corp. (EDMC) and Washington Post (WPO) Co.’s Kaplan Higher Education. Education Management wasn’t among the companies included in the GAO’s report, said Jacquelyn P. Muller, a spokeswoman.

Fictitious Identities

Investigators attempted to enroll using fictitious identities or credentials and successfully did so at 12 of 15 colleges, according the report.

University of Phoenix was one of the three institutions that declined to admit students based on insufficient credentials, according to spokesman Rick Castellano.

“We continue to uphold the highest standards across higher education, ensuring that the students who enroll are qualified and well prepared to meet our rigorous standards,” Castellano said in a statement.

Once enrolled in those schools, the students submitted substandard work. In an online program leading to an associate’s degree in business, an undercover student handed in plagiarized material, such as articles copied from online sources or verbatim from a class textbook. The instructor gave full credit in one case and continued to give credit for other assignments. The school didn’t issue any citation for academic misconduct after the student failed the course.

No Counseling

In an associate’s degree program for criminal justice, a student received full credit for an assignment that was prepared for another class, the GAO said. Three students received no exit counseling about their student loans, as required by federal law.

Kaplan was one of the colleges that “got a clean bill of health” in the report, according to Mark Harrad, a company spokesman. The investigator enrolling in a Kaplan paralegal studies program was expelled for not completing the work, leaving before incurring student-loan debt, Harrad said in a telephone interview.

In a 2010 GAO report, also commissioned by Harkin’s committee, the agency found that 15 colleges used misleading and fraudulent techniques to recruit students.

The agency later made corrections to the report, leading to criticism from industry groups and Representatives Darrell Issa of California and John Kline of Minnesota, both Republicans. While there were weaknesses in the process of preparing the report, it was accurate and unbiased, the GAO said Feb. 8.

‘One-sided’

“We should be dubious of this new report,” said Moran of the college association, citing what he called “serious flaws” in the earlier investigation and Harkin’s “one-sided” inquiry into for-profit colleges. “Similar questions could and should be raised about the nonprofit sector.”

Senior GAO officials gave the new report special attention to avoid errors, Richard Hillman, a GAO managing director, said in a phone interview.

“We are very confident in the contents of contents of this report,” said Hillman, its author.

To contact the reporter on this story: John Hechinger in Boston at jhechinger@bloomberg.net

To contact the editors responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net.

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