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Congresswoman Maxine Waters Applauds the Department of Justice and 11 State Attorney Generals on the Filing of the False Claims Lawsuit against Education Management Corporation

August 11, 2011
Press Release

Congresswoman Maxine Waters reacts to the recent False Claims Lawsuit filed against Education Management Corporation by the Department of Justice and 11 State Attorney Generals. Her statement on the recent filing is below:

"Today is an important day in the fight for preserving quality higher education in America. The federal government has joined with 11 states, including California, to file a formal complaint against the Education Management Corporation (EDMC), charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011. Education Management Corporation, which is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools operating under four names: Art Institute, Argosy University, Brown Mackie College and South University.


"Education Management is being charged with falsely certifying its compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters.  Between 1999 and 2010, EDMC schools received $93 million in Cal Grants. In 1992, my colleagues and I in Congress enacted the Higher Education Amendments of 1992 (S. 1150) which made incentive compensation illegal. Eliminating of the practice of paying bonuses and commissions to recruiters within private post-secondary and vocational schools was a huge step in for-profit school regulatory reform.  We passed this law because we found that It these boiler room-style recruiting practices resulted in the enrollment of thousands of unqualified students, high student loan default rates and the downright waste of state and federal tax dollars.


While only accounting for10 percent of the students enrolled in higher education in addition, for-profit colleges account for about half of all defaults on student loans. Therefore we must hold these institutions accountable for the educational services they provide to our students at the taxpayers' expense. I will continue to follow this investigation as it progresses and I encourage my colleagues on both sides of the aisle to work together on meaningful legislative reform of the for-profit college industry."