ABC News Investigates For-Profit Education: Recruiters at the University of Phoenix

Aug. 19, 2010— -- Ads for online schools are all over the Internet, plastered on billboards in subway cars and on television. The University of Phoenix, with nearly 500,000 students, is the biggest for-profit college. But some former students said they were duped into paying big bucks and going deeply in debt by slick and misleading recruiters.

"I don't want anyone else to be sucked in," said Melissa Dalmier, 30, of Noble, Ill.

The mother of three had big dreams to be an elementary school teacher, so when she saw ads for the University of Phoenix pop-up on her computer, she e-mailed them for more information. A few minutes later, Dalmier said she got a call from one of the school's recruiters, who she said told her that enrolling in the associate's degree in education program at the University of Phoenix would put her on the fast-track to reaching her dream.

"[The recruiter said] they had an agreement with Illinois State Board of Education and that as soon as I finished their program I'd be ready to start working," she recalled.

Within 15 minutes, Dalmier was enrolled. Since she didn't have enough money to pay for tuition, she said the recruiter helped her get federal student aid. In total, she took out about $8,000 in federally-guaranteed student loans.

But just a few months after Dalmier started, she said she learned the horrible truth: the degree program she was enrolled in would not qualify her to become a public school teacher upon graduation in Illinois.

"It was an outright lie. A bold faced lie," she said.

It's not the first time that the controversial school, which obtains almost 90 percent of its revenues from students paying tuition from federal aid, has come under fire for its recruiting methods.

The University of Phoenix was one of 15 for-profit schools whose aggressive recruiting practices were the subject of hearings held by Sen. Tom Harkin, D-Iowa. The Government Accountability Office sent investigators to for-profit schools across the country and found that all of them were misleading potential students.

In 2004, the University of Phoenix paid nearly $10 million to the Department of Education to settle allegations that it had violated rules about its recruiting practices. The school did not admit any wrongdoing.

"I think maybe the whole orchard is contaminated," Harkin said. "There's a systemic problem with the system itself that needs to be addressed."