Profit the ultimate motive in trade-school recruiting

04:47 PM CDT on Wednesday, June 8, 2005

By BYRON HARRIS / WFAA-TV

School's out, and a lot of new graduates are about to make the biggest purchase of their lives.

It's not a car, but an education at a trade school or career college.

Auto dealers and trade schools both have salespeople, but at a car lot every customer knows the salesman is out to make money. At trade schools and career colleges, a salesperson often bears the title of "career counselor" or "advisor" - and the customers, often just out of high school, probably don't know what they're getting into.

"They're putting their faith and trust in you, and what you're telling them about this school," said Ann Gay.

Gay is a former counselor at Lincoln Tech in Grand Prairie. But she said her job was to sell student enrollments at the school, where tuition could be close to $20,000 per course.

Gay said she had to bring in a certain number of students per month or she'd be fired. She said the longer they stayed enrolled, the more money she made.

"We worked on very strict quotas which took me from being a counselor or recruiter to a salesperson," she said.

Jane McCabe recruited for Lincoln Tech across greater Houston, trying to convince youngsters from around the area to go all the way to Grand Prairie for trade school.

"They were just getting bodies in; it didn't matter if they could qualify on a test or even if they could read or write, I guess," McCabe said. "If I got Little Johnny interested, I would go home and sit down with this book and meet with his parents."

Eventually the pressure from the school - along with guilt - overtook both employees. They quit, upset that it seemed like they were taking advantage of newly-graduated high schoolers.

"They're very innocent," Gay said. "They're very dependent at that point in their lives about someone giving them direction."

The Higher Education Act said it's illegal for for-profit education companies that receive government money to use incentives like sales quotas or bonuses to increase enrollment.

McCabe and Gay sued Lincoln Tech under a law that allows citizens to help the government reclaim money gained by fraud. That was more than five years ago, yet the case goes on.

Lincoln Tech president Lawrence Brown, contacted at company headquarters in New Jersey, said the lawsuit is frivolous. He did say, though, "There are expectations on the number of students recruiters enroll."

Brown said recruiters do get paid for enrolling students after the students graduate. The graduation rate in Grand Prairie, he said, is between 60 and 66 percent.

Attorney Scott Levy represents McCabe and Gay, and is involved in lawsuits against four other proprietary schools in Houston.

"They're violating the Higher Education Act," Levy said. " The students are being victimized by the fraudulent recruiting practices of these companies."

Levy points out that a Justice Department brief says the government has lost $400 million due to illegal incentives in another recruiting-bonus case.

Ann Gay has transformed herself from recruiter to crusader, and she said she wants to win her case to protect future students.

"It's wrong," she said. "The system is so flawed, that somebody has to take a look at it. It's business; it's big business. There are people are making lots and lots of money."

Lincoln Tech has 32 schools in six states. It's privately held, so financial numbers are unavailable, but the eight largest for-profit school companies in the United States are worth a total of $36 billion.

The recruiter-pay issue will go before the Supreme Court for review this week.