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For-profit colleges hit with claims of fraud, aggressive recruiting

At a Senate hearing Wednesday, government investigators released evidence that some for-profit colleges encouraged students to falsify financial aid documents.

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In a blurry video, a financial aid officer at a for-profit college tells an applicant to leave off any mention of a $250,000 inheritance when filling out aid applications, saying it’s really not the government’s business.

The applicant was an undercover investigator, one of several who encountered aggressive recruiting tactics, deception about employment prospects, and in some cases outright fraud on their 15 visits to for-profit colleges around the country.

The investigation was conducted this summer by the US Government Accountability Office (GAO) and presented at a hearing Wednesday by the Senate Committee on Health, Education, Labor and Pensions (HELP). By not reporting the inheritance, undercover applicants would have fraudulently qualified for federal grants and loans.

The GAO’s findings “make it disturbingly clear that abuses ... are not limited to a few rogue recruiters," said HELP Committee Chairman Tom Harkin (D) of Iowa. "The evidence points to a problem that is systemic to the for-profit industry.”

Wednesday's hearing was the second in an ongoing series examining practices at for-profit colleges. About 2,000 such schools – private or publicly traded companies whose net earnings can benefit shareholders or individuals – are eligible to receive federal student aid.

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