Consumers Digest Exposes Online Universities' Exploitation of Federal Title IV Student Financial-Assistance Program

Mar 03, 2009, 08:00 ET from Consumers Digest

DEERFIELD, Ill., March 3 /PRNewswire/ -- For-profit online universities represent a $6.2 billion industry with some 620,000 students as of fall 2008. Because of questionable oversight by the federal government, some of these "institutions," such as Kaplan University and University of Phoenix, are able to skirt requirements of the Title IV student-assistance program that is part of the Higher Education Opportunity Act, and thus, mostly taxpayer money is filling the coffers of these companies. The transgressors often use high-pressure tactics to mislead individuals regarding the value of a degree and the costs involved in working toward that degree. Many potential students are deceived about the transferability of credits earned elsewhere. Allegedly, instructors are pressured to inflate students' grades to keep them enrolled and the financial aid flowing in -- and are rewarded for doing so. For students, all of this can result in subpar coursework, insufficient job training and a degree that is devalued by employers -- a complete waste of a student's time and money.

In the course of producing the investigative report, "Degrees of Difficulty: The Truth About Online Universities," in the April issue of Consumers Digest (on sale March 3), interviews with 26 former employees and students from the biggest for-profit online universities brought to light the questionable role of admissions "advisers" who know little about academia but a lot about sales; the existence of giant call centers adorned with large wallboards that track applicants and enrollment numbers; and bonus- and commission-based enrollment practices -- even though federal law prohibits schools that are eligible for federal funding from using these practices.

Consumers Digest interviewed former advisers who say students weren't always told which previous college credits would transfer until after signing a contract. In some cases, schools continued to tap student loans even after students stopped taking classes. Clearly, as the deeply troubled banking industry has recently proven, providing billons of dollars in loans to unqualified borrowers has very serious economic consequences. More effective government oversight and overhaul of antiquated or inadequate regulations are badly needed.

All of this is supremely upsetting -- particularly today, given that the hopes of many people who have been laid off hinge on applying an online education to landing a new job. It complicates the already difficult task of convincing potential employers that an online education equals that of a brick-and-mortar institution.

Consumers Digest warns consumers not to enroll at a for-profit online university until obtaining in writing a formal audit of transferable college credits. If consumers are considering a degree in a career field that requires recognition by a professional organization, they should consult the body that grants licenses to do business to ensure that the online school's accreditation is recognized. Consumers should also find out the official drop date of an online university -- usually buried in student-manual small print -- and closely examine all financial documents, in an effort to ensure that there are no disbursements of funds after withdrawal from classes.

Consumers Digest, launched in 1959, is designed to inform and educate readers so they can buy with confidence, no matter the product or service. The magazine is committed to providing practical advice, factual evaluations and specific recommendations, leading consumers to exceptional values in today's complex marketplace.

SOURCE Consumers Digest