U.S. Joins Fraud Lawsuit Against For-Profit Education Giant

Four states join forces to sue Education Management Corp., an organization that manages many for-profit schools.

So this is pretty big news. The Justice Department and the attorneys general of four states joined a lawsuit against Education Management Corp. , which operates a host of for-profit colleges including Argosy University, The Art Institutes (most definitely not to be confused with prestigious schools with similar names such at The School of the Art Institute of Chicago), Brown Mackie College, and South University. Most of the programs the for-profit schools offer are highly career-oriented or trade oriented.

The complaint alleges that Education Management Corp. broke a law prohibiting for-profit colleges from paying recruiters incentive compensation and repeatedly made false statements to conceal its practices in order to receive some $11 billion in federal and state financial aid.

Education Management is vigorously defending the lawsuit, calling the allegations "flat-out wrong."

We have no idea how all of this will play out. Nevertheless, we'd say that it's a pretty good rule of thumb to be wary of any school that uses high-pressure sales techniques to try to enroll you (unless you are a star athlete or something like that).

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