Dive Brief:

• A U.S. District Court judge has ruled that a lawsuit that accuses for-profit college operator Education Management Corp. of fraud can move forward.
• The company, which is accused of wrongfully obtaining more than $11 billion in student aid, had asked for the whistleblower lawsuit to be dismissed.
• Former Education Management employees claim in the lawsuit that the company tried to maximize enrollment by tying employee bonuses directly to the number of students enrolled and other prohibited compensation practices.

Dive Insight:

Education Management, which is partly owned by Goldman Sachs, allegedly had a goal of increasing enrollment to 50,000 by 2011 from 4,500 in 2006. The case has seen 11 states and the District of Columbia intervene. As Bloomberg reports, for-profit colleges in general have been hurt by federal and state investigations of their marketing and recruiting practices, tuition rates and poor results. Education Management’s enrollment is down 22% in the last three years to 122,990 students. The company is also facing claims from one of its former recruiters that it falsified data about its students’ job placements.