Never mind sleazy tactics, feds ease up on for-profit colleges

Not so long ago, the use of strippers as college “admissions counselors” would provoke federal scrutiny. Oh, how those government regulators did meddle.

One Florida operation, indeed, employed exotic dancers, perhaps the most salacious of the various lowdown recruitment scams run by unscrupulous actors in the for-profit college industry. And the U.S. Department of Education, the Consumer Financial Protection Bureau and the Justice Department came calling.

For-profit colleges, some of them, used lies and the kind of boiler room sales techniques once associated with timeshares, penny stocks, subprime mortgages and Everglades swampland. The schools targeted vets, immigrants, poor minorities, high school dropouts, even the homeless, signing them up for courses that cost far more than comparable classes at public community colleges.

Then they milked those suckers for all they were worth in student loans.

No wonder the feds were piqued. In a report released last month, the Century Foundation scrutinized 98,868 applications for loan relief filed with Department of Education during the last two decades by students who complained that they had been defrauded or misled by their respective schools. For-profits, which enroll just over 10 percent of America’s college students, had generated 98.6 percent (97,506) of the complaints.

Meanwhile, only 559 students from public colleges and universities filed fraud complaints. In something of an understatement, the Century Foundation said its findings demonstrate a “disproportionate concentration of predatory behavior among for-profit colleges.”

This follows a 2014 U.S. Senate report that found for-profit colleges were gobbling up 25 percent of federal student loans and grants. And that taxpayers haven’t been getting much for their money. Senate investigators found that more than 60 percent of for-profit students drop out without so much as a two-year degree. Instead of high-paying jobs, former students often come away with only high-interest debts. The default rate on federal education loans among for-profit college students runs five times higher than nonprofit colleges.

Amid the national clamor about these abuses, state attorneys general sued for-profit colleges over “predatory and misleading practices.” Then the Obama administration joined the fray.

South Florida’s very own FastTrain College was an obvious target. In 2014, federal prosecutors claimed FastTrain, among other transgressions, “purposely hired attractive women and sometimes exotic dancers and encouraged them to dress provocatively while they recruited young men in neighborhoods to attend FastTrain.” Apparently, FastTrain was not going after National Merit Scholars.

FastTrain, which had campuses in Fort Lauderdale, Pembroke Pines, Miami, Kendall, Tampa, Jacksonville and Clearwater before the crackdown, was hit with a $20 million fine. FastTrack CEO Alejandro Amor was given an eight-year prison sentence for overseeing an operation that specialized in falsifying federal financial aid and loan applications for unqualified students, including 1,300 who hadn’t even graduated from high school.

Poor Amor. Such bad timing. He had the unhappy luck to be snagged during the Obama administration’s furious pursuit of for-profit college abuses. Obama’s Department of Education also busted up for-profit giant Corinthian Colleges, with 105 campuses, including 15 in Florida, for inducing prospective students to take out school loans based on “false and misleading representations about its graduates’ career opportunities.” And by inflating the employment statistics of its gradates.

And last year, ITT Technical Institute, a national for-profit chain of 137 schools with 35,000 students, including 1,300 enrolled in South Florida, closed after the Obama administration cut off its access to the federal dollars because of similar tactics.

But happy days are here again. At least for the sleazy non-profit colleges that make their money by brokering student loans.

Secretary of Education Betsy DeVos has rescinded Obama administration regulations aimed at protecting students from predatory lending, including loans induced by embellished claims about employment opportunities once a student graduates.

And DeVos hired Julian Schmoke Jr. to run the higher education fraud division. Schmoke happens to be a former dean with for-profit DeVry University, a chain that just last year agreed to pay $100 million to resolve student complaints about misleading recruitment pitches.

The Department of Education, meanwhile, has adopted a nifty strategy to deal with student loan fraud complaints. Just stop processing them. The Century Foundation reported that the DeVos DOE has a backlog of 87,000 new fraud claims that have not yet been reviewed.

DeVos, of course, was hired by Donald Trump, onetime owner of a pricey real estate seminar called Trump University that was beset with lawsuits claiming misleading practices. (In March, Trump agreed to pay out $25 million to settle the suits.) None of the complainants, however, suggested that they had been enticed by strippers to sign up for Trump U. Provocatively attired admission counselors seems to have been a Florida specialty.

Fred Grimm (@grimm_fred and leogrimm@ gmail.com) has worked as a reporter or columnist in South Florida since 1976.