For-profit colleges on notice

October 12, 2021
by Carol Kando-Pineda
Attorney, Division of Consumer & Business Education, FTC


For-profit colleges sometimes use overblown — or flat-out false — promises to attract new students and their money. The FTC is ramping up its efforts to stop shady practices on campus. The Commission is sending a Notice of Penalty Offenses to the largest 70 for-profits, warning them that the FTC will not stand for unfair or deceptive practices.

Why the heads-up? Under federal law, the FTC may put companies on notice that some practices have been found to be unfair or deceptive in administrative cases with final cease and desist orders, other than consent orders. If a company knows about (the law says has “actual knowledge” about) the orders and uses those same deceptive marketing tactics, the FTC can sue the company in federal court for civil penalties. The Notice outlines those prohibited practices: claims about the career or earning prospects of their graduates, the percentage of graduates that get jobs in their chosen field, whether the school can help a graduate get a job, and more. These are just the kinds of information a student would want to know before committing to a program — and it’s exactly how some for-profit schools market their programs.

The FTC has been going after false and misleading claims in education for nearly a century, but fraud in this sector persists. Most recently, the University of Phoenix agreed to a $191 million judgment to settle the FTC’s charges that, to attract students, it used deceptive ads that falsely touted its relationships with and job opportunities at companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross. In another matter, DeVry University paid $100 million to settle the FTC’s charges that the for-profit misrepresented the employment and salary prospects of its graduates. Additionally, the Commission has published a guide for vocational schools describing practices that the agency determined are deceptive.

Servicemembers and student veterans are often the targets of schools’ deceptive marketing. For-profit schools have had a strong incentive to enroll veterans because of the education benefits servicemembers can use to pay for college. This has led to aggressive targeting of servicemembers, veterans, and their families. For example, the FTC’s case against Career Education Corporation (“CEC”)charged it with recruiting prospective students using marketers who falsely claimed to be affiliated with the U.S. military, tricking students who were looking to serve their country.

There are tools to help veterans, servicemembers, and all kinds of students navigate the education marketplace and blow the whistle on bad actors. If you have a federal student loan and feel like a school misled you or broke the law, apply for loan forgiveness through the Department of Education’s (ED’s) Borrower Defense to Repayment procedures. If you’re getting started (or re-started), ED’s Opportunity Centers are designed to help prospective students (including people of modest means, first-generation college students, and veterans) apply for admission to college and arrange for financial aid and loans. Find one near you.

Servicemembers: talk with your Personal Financial Manager to get hands-on help with your next steps. And vets can call the VA’s GI Bill Hotline to discuss questions about education benefits: 1-888-GIBILL (1-888-442-4551), or visit the VA site to learn more. Before enrolling, you can find out important information about any school — including whether it’s a for-profit school — at the U.S. Department of Education’s sites, College Scorecard or College Navigator. The FTC’s Military Consumer site also has helpful advice on finding and paying for school.