Justice Dept., 4 States Sue Education Management

August 9, 2011

The U.S. Justice Department and four states on Monday joined a whistle-blower lawsuit against Education Management Corp., a major player in for-profit higher education, charging that the company violated federal law by paying some admissions officers with incentives based on the number of students recruited. Congress barred such compensation out of the belief that it created incentives for recruiters to enroll students who might not benefit from programs, but who would use federal grants and loans. An EDMC statement to the Associated Press denied wrongdoing, saying that at the time of the alleged violations, federal regulations allowed some forms of incentive compensation, as long as other factors also went into the pay decision.

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