Pennco Tech admitted every student who applied, suit charges
04/19/2011 | Truman Lewis | ConsumerAffairs.com
An admissions rep at Pennco Tech, a trade school in Bristol, Pa., claims the school fired him for refusing to participate in a racketeering scheme that ensured that every student who applied would be enrolled.
Matthew Hamilton claims the scam was so blatant that a senior admissions rep “had to physically stand over the students to make sure they were entering the correct answers” on entrance exams.
Hamilton’s suit is just the latest in a lengthy series of lawsuits and allegations that many for-profit schools are providing nearly-worthless degrees and certificates while burdening students with large debts that they are unlikely to repay.
Hamilton’s study alleges that during his one and a half years at the school, test results were falsified, students were misled and the government and lending institutions were defrauded. Hamilton said some students had learning disabilities so severe that admissions staff “had to physically stand over them to make sure they were entering the correct answers,” even though accrediting requirements prohibit admissions personnel from administering tests.
Hamilton said he was “point-blank directed … to participate in the falsification process” to ensure that every student who applied was enrolled even though he said he “adamantly objected.”
Besides seeking damages for wrongful discharge, Hamilton’s suit alleges that his firing constituted a violation of the Pennsylvania Whistleblower Act.
Pennco is a trade school that provides education in fields including pharmacy tech, auto repair, air conditioning, plumbing and many other fields. It is accredited by the Accrediting Commission of Career Schools and Colleges (ACCSC), Arlington, Va. Besides its Bristol location, it also operates a school in Blackwood, N.J.
Pennco does not appear on the ACCSC’s list of schools that are currently on probation. Schools currently on the probation list include State Barber and Hair Design College, Oklahoma City; Professional Massage Training Center, Springfield, Mo., Universal Career Community College, Puerto Rico; and Universal Technical College of Puerto Rico.
The U.S. Department of Education has proposed rules that would make these for-profit colleges and universities ineligible for government-backed student loans if fewer than 35 percent of students and former students are paying their loans. Schools would also be denied access to federal funds if graduates are spending more than 12 percent of their income to pay back student loans.
Meanwhile, many for-profit schools have begun making costly private student loans knowing in many cases that more than half of these loans will never be repaid, a report from the National Consumer Law Center (NCLC) finds.
Most of the schools started the institutional loan programs when third-party private student lenders began terminating their partnerships with for-profit schools following the credit crash.
The report said schools seem to view these “institutional loans” as loss leaders to keep the federal dollars flowing. Among other reasons, proprietary schools must show that at least 10% of revenues come from sources other than Department of Education federal student assistance.
Schools thus make unaffordable loans as a way of filling up the 10% category with “vapor” revenues derived from loans that will never be repaid, the report said.