Justice Department sues profitable Goldman Sachs college company on a technicality

The Department of Justice and several states have filed a fraud lawsuit against the Education Management Corporation, the second-largest for-profit college company in the United States.

The lawsuit charges that the company enrolled poor applicants who were not qualified for its programs – signing up students without computers for online education programs, for example – in order to collect state and federal financial aid payments for the students. The company received $11 billion worth of financial aid payments from July 2003 through June 2011.

The complaint against Education Management was originally filed four years ago by two former employees who’d worked in admissions and training for the company. The New York Times explains why this suit is significant:

While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.

“The depth and breadth of the fraud laid out in the complaint are astonishing,” said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit. “It spans the entire company — from the ground level in over 100 separate institutions up to the most senior management — and accounts for nearly all the revenues the company has realized since 2003.

Pittsburgh-based Education Management enrolls about 150,000 students in 105 schools that are part of four chains: Art Institute, Argosy University, Brown Mackie College and South University. Goldman Sachs owns 41 percent of the highly-profitable company.

Illinois, Florida, California and Indiana filed the lawsuit along with the Justice Department on Monday, and on Tuesday, Kentucky requested to join the group, Bloomberg reports. The Kentucky Higher Education Assistance Authority has paid more than $6 million in need-based and merit-based financial aid grants to Brown Mackie Colleges in the state since 2004.

Education Management denies any wrongdoing, the Associated Press reports. "The pursuit of this legal action by the federal government and a handful of states is flat-out wrong," Bonnie Campbell, a former Iowa attorney general and member of the state Board of Regents who is an adviser to the college's legal counsel, said in a statement.

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Affording private school fees in Britain

What price education? Quite a lot, it turns out, with the average school fees for a private pupil now £4,393 a term according to the Independent Schools Council. New research today shows that parents who want their children to be educated independently are having to get savvier, thanks to above-inflation fee increases and the economic downturn.

Figures from Schroders suggest that some parents are now choosing to send just one child to private school, while the rest are educated in the state system. Others are cutting the pie a different way, with a quarter of parents with children under 15 in the state system considering switching their offspring into a private school sixth form just for their final pre-university education.

“Families are being forced to make extremely tough decisions in the current economic climate, as inflationary pressures erode monies available for discretionary spending on private education,” said Robin Stoakley, managing director of Schroders’ UK Intermediary Business.

His solutions are predictable enough – invest in high quality funds that can “realistically deliver inflation-beating growth”. However, anyone who has been looking at the sea of red that has been London’s stock market in recent days might be forgiven for wondering whether their investments are really going to deliver enough to pay eye-watering school fees – especially with university fees being an issue as well.

Janette Wallis, editor of the Good Schools Guide, said that many families found it distasteful to send one child private but not another, but that they are having to save money. “We have seen lots of people save money by targeting their spending,” she said, saying that GCSEs can be a popular time. “It’s perfectly possible to send a child private for two years – age 14 to 16 – and then move them on to a state sixth form.”

“Parents should think more in terms of equivalency of experience, rather than parcelling out the exact same experience to each child. So, if for example there is a good boys’ grammar school in your area that your son can attend, but no equivalent for girls, then it may make sense to pay for your daughter to attend a private school, while taking advantage of state provision for your son.

Money can be saved and a bit extra be made available to the son for tutoring or similar educational add-ons. So long as it is discussed openly and both children are content there’s no cause for guilt,” she said.

If you are panicking about how you will educate your children, you need to start thinking realistically. The longer you have to plan, the better, but whatever stage you are at, there are things you can do to take the sting out of the prices.

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Australia: No national curriculum for NSW students

Much of its content was designed by a former Communist

NSW students will not study the new national curriculum in 2013 after the state government yesterday delayed its implementation.

Cracks are appearing in the federal government's curriculum reform, with NSW the first state to pull out over concerns about its content.

Education Minister Adrian Piccoli said he was still committed to a national curriculum but was delaying its introduction into NSW schools until at least 2014. He would not rule out further delays if the commonwealth failed to address concerns.

NSW schools were due to teach the national curriculum in English, maths, science and history for kindergarten to Year 10 from 2013.

The Board of Studies raised concerns over the content and advised the government not to proceed.

Mr Piccoli said teachers needed training before teaching the new syllabus, which will cost $80 million over four years, and needed to be funded by the federal government.

Federal Education Minister Peter Garrett said there was no reason for the backdown by NSW, which was jeopardising students' education.

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