The Justice Department filed suit yesterday against the Education Management Corp charging that it was not eligible for $11 billion received in financial aid since 2003.At the heart of the lawsuit is the claim brought by two former employees that EDMC recruiters were compensated based entirely on the number of students added, in direct violation of the law. In a “boiler-room” culture, recruiters allegedly pressured uncertain students into loans they couldn’t afford.
EDMC, which by the way is 41% owned by Goldman Sachs, denies claims about its compensation scheme.
Anyone who can fill out an application and write a 150-word essay will be accepted as an EDMC student
Recruiters brag about career services and falsely tell students they will have lifetime access to these services
When one student tried to cancel enrollment for personal reasons, a recruiter lied to him and said that it was too late
Recruiters don't care whether or not students succeed. Indeed EDMC students have a shocking 40% dropout rate
If students are reluctant to accept loans, recruiters lie to make it seem like they will owe less money
The top recruiters in terms of sheer numbers added were rewarded with trips, tickets and other bonuses
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