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Pittsburgh-based Education Management Corporation has settled charges that recruiters for the for-profit education company were paid based on the number of students enrolled. The price tag with the federal government: $96 million.

Commission-based recruiting has been a chronic problem in the for-profit education industry, with "admissions counselors" often incentivized to convince students to enroll at schools because bonus compensation depended on it.  This phenomenon created the potential for schools to over promise and under deliver.

According to one report regarding EDMC's settlement announced in early January 2016, U.S. attorneys alleged that EDMC was running a "high pressure sales business" that "paid its recruiters based only on the number of students they enrolled." A majority of EDMC's multi-billion revenue since 2003 came from federal student loans and grants -- in other words, taxpayers. 

EDMC's schools have included the Art Institutes, South University, Argosy University and Brown-Mackie College.

In a press release, then-U.S. Department of Education Secretary Arne Duncan stated, "We will not stand by while you profit illegally off of students and taxpayers."
 


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