New York Consumer Agency Opens Investigation Into Four For-Profit Colleges

Student dropouts, loans default rates and recruiting tactics have been the cornerstone of many federal and state investigations into for-profit colleges. It appears to be much of the same for four such schools facing probes by the New York City Department of Consumer Affairs.

The New York Times reports that the consumer agency has opened investigations into four local for-profit institutions – Berkeley College, Mandl School, New York Career Institute and Technical Career Institutes (TCI) – after receiving hundreds of student complaints.

Those complaints have often centered on the recruiting tactics employed by the institution, including reports of repeated phone calls and pressure to commit to the school during visits to the campuses.

“What we are concerned about is that predatory, for-profit colleges are taking advantage of the ambition that so many New Yorkers with low incomes have for a better life, and cheating them out of their dreams and their money,” Julie Menin, the commissioner of consumer affairs, tells the Times.

Back in February, the agency issued subpoenas to the schools requesting documentation about recruiting procedures and proof of job placement claims used in marketing.

Agency representatives say the subpoenas seek to seek to determine whether the schools have violated the city’s consumer protection laws. If violations are found, the schools could face fines or be sued to return tuition to students.

The Times reports that each of the schools under investigation receive a majority of their revenue from federal student aid and have soaring student default rates.

Federal aid makes up 77% of the revenue at TCI, while the school records a 24% default rate for students who began repayment in 2011.

Likewise, Mandl receives about 80% of its revenue from student aid and has a student loan default rate of 17% for the same time period.

Additionally, the Agency reports that each of the four schools have relatively low rates – ranging from 24% to 60% – for first-time, full-time student graduating within 150% of a “normal time.”

Menin, with the Consumer Affairs Department, says that while the agency is currently only investigating the four named institutions, it could expand the scope to include other potentially problematic for-profit schools.

For-profit colleges have been under increased scrutiny in recent years, with many national chains – such as ITT Technical Institute and Corinthian Colleges, Inc. – facing federal and state investigations regarding potentially predatory practices.

New York City Consumer Agency Investigating Four For-Profit Colleges [The New York Times]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.