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Obama Targets For-Profit College Recruiting in Proposed Rules
By John Hechinger
June 16, 2010
The Obama administration proposed banning for-profit colleges from tying recruiters’ pay to the number of people they enroll, saying high-pressure sales tactics induced students to take out government loans they can’t afford.
The rules would prohibit paying sales incentives at Apollo Group Inc., ITT Educational Services Inc., Career Education Corp. and other for-profit colleges, according to a copy of the proposal by the U.S. Department of Education to be made public today. At for-profit colleges, recruiters contact potential students, often after they express interest over the Internet.
U.S. Secretary of Education Arne Duncan is seeking to protect taxpayers from loan defaults and to stop students from taking on debt for programs that don’t lead to higher incomes. For-profit colleges can receive up to 90 percent of their revenue from federal grants and loans. Federal aid to for-profit colleges jumped to $26.5 billion last year from $4.6 billion in 2000, according to the Education Department...