Goldman Sachs:Involved in corrupt for profit college practices. Cost to the taxpayers: Billions

The emotional toll on the students: unimaginable

http://www.nytimes.com/2015/11/17/us/for-profit-college-operator-edmc-will-forgive-student-loans.html?_r=0

In resolving the federal and state complaints, Education Management, which is owned partly by Goldman Sachs, did not acknowledge wrongdoing. Doing so would have meant that individual students would have had potential grounds to discharge their loans taken out to attend the colleges, potentially costing hundreds of millions of dollars.

The Education Management agreements followed an investigation that began in 2007, when a former assistant director of admissions in Pittsburgh filed charges in federal court accusing Education Management of compensating employees based on the number of students they enrolled. The practice violates a federal ban on per capita incentive compensation designed to prevent colleges from enrolling students who have little chance of college success.

The lawsuit said the company had collected about $11 billion — 90 percent of it in federal student aid — through these aggressive tactics from 2003 to 2011. The federal government intervened in the lawsuit in 2011 under the False Claims Act.

Had the case gone to trial, the company could have been liable for billions of dollars in damages. Attorney General Loretta E. Lynch said a lower figure was approved because the government had considered the company’s ability to pay. Education Management’s share price had fallen sharply since the investigation began, to about 9 cents on Monday from about $28 at the end of 2011.