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For-Profit Colleges Encouraged Fraud, Used Deceptive Marketing, GAO Reports

A Senate committee saw video evidence that for-profit colleges are using high-pressure sales tactics that would make a used-car salesman blush.

The Senate Health, Education, Labor and Pensions Committee held a hearing on recruiting efforts by for for-profit industry, which has been growing rapidly over the last decade, thanks in large part to federal loans students take out to pay tuition.

The Government Accountability Office sent undercover investigators into 15 different for-profit colleges around the country.

Some recruiters, caught on hidden cameras, openly urged applicants to lie on the federal form use to obtain student aid. One student was urged not to report $250,000 in assets because it was "none of the government's business." Other would-be students asked to speak to a financial aid counselor, but were told they'd have to sign an admissions form first. In some cases, applicants practically begged to get a full accounting of the likely costs, but were told they'd have to sign on the dotted line first.

The hearing comes amid growing pressure to regulate for-profit schools more stringently.  At the same time, the industry argues these schools are serving students who cannot get into state and private schools. The slow economy has sent many people back to school to improve their skill sets.

Senators at today's hearing were outraged — that's what Senators at such hearings do. But since most of the practices shown are illegal, it seems the only thing that's needed is better enforcement, though some student advocates have urged regulators to shut down schools that rely too heavily on student aid, or whose graduates do not earn enough to repay their loans.

On the plus side for the industry, some schools were caught on camera giving out, of all things accurate advice, and urged students not to go too deeply into debt.

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