10 Outrageous U.S. For-Profit Schools

Want to avoid massive loan payments for worthless degrees or certificates? In the U. S., go only to regionally accredited post-secondary schools. Avoid those that boast of being nationally accredited and those that aren’t accredited at all.

Unless a school’s reputation is impeccable, such as that of an Ivy League school, it’s usually better (and economically safer) to choose a state university or college. It is safer, by far, to borrow from a U.S. government loan program than from a private lender.

The experiences of the unfortunate victims of the ten outrageous U.S. proprietary (i.e., for-profit) schools on this list provide additional lessons well worth learning. Fortunately for the students, many received financial relief—thanks to taxpayers.

Related: 10 Legitimate Business Industries That Seem Like Scams

10 The Brown Mackie College

In its November 16, 2015, press release, the U.S. Department of Justice lauded its role in helping to secure a $95.5 million settlement against Education Management Corporation (EMC). The settlement resolved four separate False Claims Act allegations introduced in federal courts in Pittsburgh, Pennsylvania, and Nashville, Tennessee. One claimed that recruiters operating in a “high-pressure boiler room” were paid exclusively on the basis of how many students they enrolled.

One of many schools owned by EMC, Brown Mackie College (BMC) offered bachelor’s degrees, associate degrees, and certificates for a variety of programs. Its founding branch was approved by the Accrediting Council for Independent Colleges and Schools (which lost its authority to accredit schools after the BMC controversy) and was licensed by the Kansas Board of Regents to award associate degrees. However, the school, which had locations across the country, experienced precipitous drops in enrollment and the closing of many of the school’s campuses.^[1]

9 International Academy of Design and Technology

Amanda Luciano put a human face on the devastating effects that students of the for-profit International Academy of Design and Technology suffered. Having borrowed $51,000 and repaid $40,000, she still owed $81,000. How was that possible?

On the advice of one of the school’s recruiters, she borrowed “from a private lender instead of the federal government,” Meredith Kolodner reported. Luciano said that, despite her sizable repayment, her balance continued to grow, her $500-a-month payments covering only the interest on her outstanding debt. Since her loan’s interest rate was not fixed, it rose and fell as the years went by. She now realizes that the school was part of a predatory scam.

In a settlement involving 150 for-profit colleges, a federal judge held that the schools’ students were entitled to an automatic cancellation of their government-backed loans due to the schools’ misconduct. Since Luciano’s loan was privately funded, the settlement did not apply to her; she remained on the hook for a loan that, she lamented, she’d “never be rid of.”^[2]

8 ITT Technical Institute

With 138 ITT Technical Institute campuses in 39 states, as of December 2015, ITT Educational Services lost a lot of money in settlements totaling an estimated $12.9 million, legal and administrative fees included. An investigation by local Milwaukee, Wisconsin, television station TMJ4 found that one student, responding to an item on an assignment for his computer forensics course, received 100 percent for listing the pros and cons concerning an issue.

The instructor noted, “‘Excellent job. You were able to generate the required number of points and counterpoints for each issue.” The student had actually written, “Ingredients: 1 ½ cups of all-purpose flour, one pinch salt, two eggs beaten.” TMJ4 reporter Aaron Diamant assured readers that they’d read correctly: “Yup, a noodle recipe.”

ITT Technical Institute also had to cancel the loans of 200,000 of its students in a whopping $6 billion settlement associated with “substantial misconduct” after the U.S. Supreme Court refused to block students’ debt cancellation.^[3]

7 Brightwood College

Brightwood (formerly Kaplan) College, operated by Education Corporation of America, provided courses in health, criminal justice, and trade programs. The U.S. Government Accountability Office found that “deceptive or otherwise questionable statements were made to GAO’s undercover applicants” by all 15 of the schools subjected to the Office’s tests, one of which colleges was Kaplan. The college’s admissions representatives were caught on tape!

Brightwood College students’ loans were expunged along with those of students of other schools who were likely or proven to have been defrauded by the for-profit schools they attended.^[4]

6 Corinthian Colleges, Inc.

At its peak, Corinthian Colleges, Inc. operated more than 100 campuses across the U.S. and Canada, offering courses in “health care, business, criminal justice, transportation technology and maintenance, construction trades, and information technology.”

A series of investigations, both in Canada and the U.S., resulted in Ontario’s suspension of Corinthian Colleges’s Everest College’s operating license and the closure of the schools’ 14 Canadian campuses. The corporation went bankrupt after it closed its U.S. locations.

According to a Washington Post article, “allegations that Corinthian lied about the success of its programs and trapped students in predatory loans ultimately led to a series of government lawsuits and loss of its access to federal funding.”

The U.S. Department of Education canceled $5.8 billion in federal student loans for 560,000 students who attended schools affiliated with Corinthian Colleges.^[5]

5 Le Cordon Bleu

As the Las Vegas Review-Journal pointed out, another for-profit school, Career Education Corporation’s Le Cordon Bleu, did not fare well in a five-year investigation. According to prosecutors, the corporation “pressured its employees to enroll students and engaged in unfair and deceptive practices,” charges that CEC denied. Le Cordon Bleu closed in 2016. Depending on their final attendance dates, students could have received debt forgiveness.

Possible relief was available under six programs, provided that students met applicable conditions. The terms were complex and, in some cases, due to their number and various qualifying criteria, confusing. The Borrower Defense to Repayment program, for example, allowed full or partial forgiveness for graduates who could prove that Le Cordon Bleu misled them about job placement rates, accreditation, or other important aspects of their education.^[6]

4 DeVry University

The U.S. Federal Trade Commission (FTC) found that DeVry University’s claims that their graduates were likely to find jobs more quickly and earn more money than other college and university graduates were deceptive. As a result, the FTC mailed payments to DeVry students who were harmed by these claims. The first checks were sent in July 2017; eventually, the amount returned reached an astounding $49 million. Some recipients never cashed their first payments, though, so the FDC started mailing more checks––5,942 more, in fact.

The checks were the students’ shares of the settlement between the FTC and DeVry University. They did not prevent recipients from also seeking other relief under federal or state law if other relief was available.^[7]

3 The Art Institutes

The Art Institutes, which had campuses across the U.S., closed its last one in 2023 amid accusations of fraud. According to the U.S. Department of Education, the schools lured students with “pervasive lies.” U.S. President Joe Biden stated that “this institution falsified data, knowingly misled students, and cheated borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies.”

Now, it was time for payback, as the Department of Education erased loans for 317,000 people who attended the school during a period between January 1, 2004, and October 16, 2017, at a cost of nearly $160 billion, which included $28.7 billion” in student loans that had already been canceled.

Presumably, part of this payback came from the $95.5 million settlement between the Art Institutes and the Department of Justice back in 2015. The source of the rest of the money, both for these and the many additional loans that financed students’ payments to other for-profit schools found guilty of various harmful practices, wasn’t identified.^[8]

2 The Famous Writers School

Fraudulent and misleading practices among for-profit schools are not new. As investigative journalist Jessica Mitford revealed in her scathing 1970 exposé of The Famous Writers School, the for-profit organization parted its enrollees from their tuition, returning little, if any, value for their investments.

Abigail Deutsch recalled Mitford’s interviewing method––or tactic––for the Columbia Journalism Review website. She would start her interviews with softball queries that became progressively more aggressive, bit by bit reducing her subjects to “self-incriminating” babblers.

The Famous Writers School’s correspondence course offered students “access to renowned authors,” said Deutsch, but Mitford soon found the truth when publisher Bennett Cerf confessed that he was much too busy to look at the aptitude tests that prospective students sent for evaluation. Poet Phyllis McGinley admitted that she was nothing more than a figurehead who couldn’t say whether any student was qualified to take the test, never having seen “any of the applications or the lessons.”

In fact, much to her chagrin, Mitford found, after publishing her exposé, the school was even sketchier than she’d known: Its teachers were actually sending students what amounted to “cleverly camouflaged form letters.”^[9]

1 Trump University

To David Whitman, the drama that embroiled The Famous Writers School was strikingly similar to the “trials of Trump University.”

Donald Trump promised to share the secrets of his real estate success with those who enrolled in his Trump University. Enrollment entailed two steps. Step 1: Sign up for a $1,500 three-day seminar during a free three-hour seminar. Step 2: During the three-day seminar, agree to sign up for a $35,000 mentorship program. Over 80,000 people showed up for the free seminar, but only 6,698 agreed to attend the three-day seminar or the mentorship program.

At the three-day seminars, attendees were assured that they would be members of a “family” able to access a hotline for advice. They would be provided access to lenders who would advance them “investment money” to buy and flip houses. It would be possible, they heard, to earn the money back, perhaps in two months’ time, one woman was told. Asking their credit card companies to increase their credit lines would help them invest in buying houses, they were advised.

Although the vast majority of the students’ surveys were positive, some students complained that they had expected Trump to continue mentoring and supporting them after the seminar ended or that the seminar had been too costly. Trump earned $5 million from the venture, the New York attorney general claimed.

A New York Daily News article reports that Trump ultimately agreed to settle the fraud cases brought in New York and California for $25 million, with $21 million reimbursing parties of “two California class action suits,” $3 million repaying “people not covered by the California suits,” and $1 million paying off a “penalty for violating New York education law by running an unlicensed university.”

In agreeing to the settlement, Trump admitted no wrongdoing, a Trump Organization spokeswoman said, stating that “Trump University would have prevailed at trial.” However, as then-president-elect, he was “keenly interested in tackling the problems of our country and moving forward”; the settlement was “part of that.”^[10]