Business

Obama plan may hurt Career Education Corp.

Posted June 16, 2010 11:00 pm

The Obama administration proposed banning for-profit colleges from tying pay for recruiters to the number of people they enroll, saying high-pressure sales tactics induced students to take out government loans they can't afford.

The rules would prohibit paying sales incentives at Apollo Group Inc., ITT Educational Services Inc., Schaumburg-based Career Education Corp. and other for-profit colleges, according to a copy of the proposal by the U.S. Department of Education schedule to be made public yesterday. At for-profit colleges, recruiters contact potential students, often after they express interest over the Internet.

U.S. Secretary of Education Arne Duncan is seeking to protect taxpayers from loan defaults and to stop students from taking on debt for programs that don't lead to higher incomes. For-profit colleges can receive up to 90 percent of their revenue from federal grants and loans.

For-profit colleges lobbied against the gainful-employment rule.

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