Promising a Better Future but Delivering Debt: Understanding the Financial and Social Impact of For-Profit Colleges and the Effect of the New Program Integrity Rules (Comment)

This Comment seeks to explain the catch-22 experienced by for-profit colleges, address reports of fraud and misrepresentation, and analyze the new Department of Education (DOE) regulations designed to increase the transparency and accountability of for-profit institutions. Part II of this Comment focuses on the business of for-profit education. Part III addresses the issues of fraud and material misrepresentation. Using the new DOE regulations as a roadmap, three areas are considered: (1) misrepresentation in marketing; (2) fraud in connection with the value of the degree; and (3) fraud relating to financial matters. Part IV discusses the October 2010 DOE Program Integrity regulations which strengthen the ban on incentive compensation for admissions representatives at for-profit colleges. Part V briefly considers the financial implications of the for-profit business model, specifically the impact of the elevated student debt shouldered by students of the for-profits. Part VI concludes by giving an overall analysis of the DOE regulations and providing additional solutions for eliminating the abuses of for-profit colleges. The analysis focuses only on a few select areas and is not intended to be a comprehensive review of the regulations