Young, black and buried in debt: How for-profit colleges prey on African-American ambition
Useless degrees are now too-good-to-be-true tickets to the American Dream -- targeted at those who can't afford it
By Kai Wright
Salon.com
Jun 9, 2013
There are a few dictums that have enjoyed pride of place in black American families alongside “Honor your parents” and “Do unto others” since at least Emancipation. One of them is this: The road to freedom passes through the schoolhouse doors.
After all, it was illegal even to teach an enslaved person to read in many states; under Jim Crow, literacy tests were used for decades to deny black voters their rights. So no surprise that from Reconstruction to the first black president, the consensus has been clear. The key to “winning the future,” in one of President Obama’s favorite phrases, is to get educated. “There is no surer path to success in the middle class than a good education,” the president declared in his much-discussed speech on the roots of gun violence in black Chicago.
Rarely has that message resounded so much as now, with nearly one in seven black workers still jobless. Those who’ve found work have moved out of the manufacturing and public sectors, where good jobs were once available without a higher ed degree, and into the low-wage service sector, to which the uncredentialed are now relegated. So while it has become fashionable lately to speculate about middle-class kids abandoning elite colleges for adventures in entrepreneurship, an entirely different trend has been unfolding in black America — people are going back to school in droves.
It’s true at all levels of education. Yes, black college enrollment shot up by nearly 35 percent between 2003 and 2009, nearly twice the rate at which white enrollment increased. But we’re getting all manner of schooling as we seek either an advantage in or refuge from the collapsed job market. As I’ve reported on the twin housing and unemployment crises in black neighborhoods in recent years, I’ve heard the same refrain from struggling strivers up and down the educational ladder: “I’m getting my papers, maybe that’ll help.” GEDs, associates degrees, trade licenses, certifications, you name it, we’re getting it. Hell, I even went and got certified in selling wine; journalism’s a shrinking trade, after all.
But this headlong rush of black Americans to get schooled has also led too many down a depressingly familiar path. As with the mortgage market of the pre-crash era, those who are just entering in the higher ed game have found themselves ripe for the con man’s picking. They’ve landed, disproportionately, at for-profit schools, rather than at far less expensive public community colleges, or at public universities. And that means they’ve found themselves loaded with unimaginable debt, with little to show for it, while a small group of financial players have made a great deal of easy money. Sound familiar? Two points if you hear troublesome echoes of the subprime mortgage crisis.
Between 2004 and 2010, black enrollment in for-profit bachelor’s programs grew by a whopping 264 percent, compared to a 24 percent increase in black enrollment in public four-year programs. The two top producers of black baccalaureates in the class of 2011 were University of Phoenix and Ashford University, both for-profits.
These numbers mirror a simultaneous trend in eroding security among ambitious black Americans with shrinking access to middle-class jobs. It’s true that the country’s middle class is collapsing for everyone, but that trend is most profound among African-Americans. In 2008, as black folks flocked into higher ed, the Economic Policy Institute found that 45 percent of African-Americans born into the middle class were living at or near poverty as adults.
For too many, school has greased the downward slide. Nearly every single graduate of a for-profit school — 96 percent, according to a 2008 Department of Education survey — leaves with debt. The industry ate 25 percent of federal student aid in the 2009–2010 school year. That’s debt its students can’t pay. The loan default rate among for-profit college students is more than double that of their peers in both public and nonprofit private schools, because the degrees and certificates the students are earning are trap doors to more poverty, not springboards to prosperity.
There’s been growing, positive attention to this problem, and the Obama administration’s ongoing efforts to rein in the excesses of for-profit schools are arguably among its most progressive policy goals. But few have understood the for-profit education boom as part of the larger economic challenge black America faces today. The black jobs crisis stretches way back to the 2001 recession, from which too many black neighborhoods never recovered. Workers and families have been scrambling ever since, trying to fix themselves such that they fit inside a broken economy. And it is that very effort at self-improvement, that same American spirit of personal re-creation and against-all-odds ambition that has so often led black people into the jaws of the 21st century’s most predatory capitalists. From subprime credit cards through to subprime home loans and now on into subprime education, we’ve reached again and again for the trappings of middle-class life, only to find ourselves slipping further into debt and poverty.
Kiesha Whatley is an example. The 31-year-old mom in Queens, N.Y., has always done hair on the side to help make ends meet, so in 2006 she decided to go for her cosmetology certificate. She was in the city’s welfare-to-work program, but was able to fill her work requirement by going to school. She figured what she needed most was to get a credential — to get legit. So she enrolled at a small, mom-and-pop for-profit in Brooklyn that her cousin had attended years before, but which had since changed ownership. Over what Whatley says was a seven-month program, she racked up more than $7,500 in debt, much of which she thought was actually a grant. She has still not passed the state cosmetology exam and she’s back to doing hair on her own, now with debt she can’t dream of paying back.
The subprime mortgage crisis was fueled by a similar mix of economic desperation, financial illiteracy and aspirational ideology. For a generation, working-class people who hoped to achieve more permanent economic stability were told, loudly and repeatedly, that buying a home would validate them as legitimate participants in American life, not just as people with an asset, but as true neighbors and community members and citizens. Prosperity preachers and presidents alike sung the praises of the “ownership society,” as George W. Bush so often called it, in which “more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.” Homeownership was understood then — just as higher education is now — as good no matter what. Just don’t read the fine print.
All it took was one devastating downturn for those doors to slam shut, forcing millions of Americans into foreclosure. That still unfolding crisis has been particularly devastating for African-Americans, who have lost more than half of their collective assets after being targeted with subprime mortgage products. The black-white wealth gap is larger today than it’s been since economists began recording it in 1984. And according to a recent analysis from the Alliance for a Just Society, ZIP codes with majority people of color populations saw 60 percent more foreclosures than white neighborhoods and these homeowners lost 69 percent more wealth.
Now, to make matters worse, expensive, nearly useless degrees may be to the bust years what expensive, totally useless refinance loans were to the boom: too-good-to-be-true golden tickets to the American Dream, sold in an unregulated market and targeted at the people for whom that dream is most elusive.
Last year, Garvin Gittens became a literal poster child for why that market is so dangerous. For several months, his face was plastered all over the New York City subway system as part of a city-led campaign to warn would-be students about debt scams. When we met last summer, Gittens laid out for me how he racked up more than $57,000 in public and private debt in pursuit of a two-year associate’s degree in graphic design at the for-profit Katharine Gibbs School, in Midtown Manhattan. Like subprime mortgages, the debt didn’t appear so intimidating at first, but just as balloon payments capsized so many tenuous family finances, a cascading series of loans, a few thousand dollars at a time, eventually caught up with Gittens. In the end, his degree proved as meaningless as it was expensive. When he went to apply for bachelor’s programs, no legitimate college would recognize his credits because the school’s shoddy performance had finally led the state to sanction it.
So Gittens has started over from scratch — but with tens of thousands of dollars in loans hanging over his head. As I listened to him recount his tale, just as he was about to once again begin his freshman year of college, what struck me most was how insistently the 27-year-old was holding on to his goal of getting credentialed. Even without a degree, he’d built a modestly successful graphic design business of his own. He’d landed fancy internships with hip-hop clothing designers and made smart choices like offsetting his design work with more reliable income from printing jobs. Yet a college degree remained such a coveted treasure for him that, even having wasting tens of thousands of dollars and two years of his life, he was prepared to do it all again.
Showing posts with label For-Profit College Recruiting. Show all posts
Showing posts with label For-Profit College Recruiting. Show all posts
Monday, June 10, 2013
Thursday, September 27, 2012
Bridgepoint cuts 450 jobs in San Diego
Ashford University Cuts 450 Jobs
By Consumer Bob, R. Stickney and Sarah Grieco
NBC 7 San Diego
Sep 25, 2012
Ashford University announced approximately 450 layoffs Monday morning. A majority of the layoffs were from San Diego, according to a school spokesperson Shari Rodriguez. Employees were told to come in early when they were shown a video and offered a two-week severance package.
Rodriguez says it is part of a company-wide reorganization.
“We were called in to this meeting that we were called in for on Friday, and we had no idea what this meeting was,” a laid off employees told NBC 7 San Diego. “This video comes on and within 30 seconds they’re like, ‘Your position no longer exists, you’re terminated.’”
Another former employee said she was in a room with 100 people when they were told by a human resources representative their positions no longer existed.
“They just said because of all the changes, they were getting laid off," she said. Employees said they were shocked by the news.
“Nobody expected it, it was a shock to everyone,” said a former employee in her 20s. “People were crying, people who have families, people who had just bought cars because they thought they had a stable job no longer have any of that.”
About a dozen former employees gathered at a Pacific Beach bar after they were told the news.
All laid off employees had worked for Ashford for less than six months and worked primarily in the recruitment area. An administrative employee told NBC 7 San Diego that many of those laid off were admissions counselors who dealt primarily with the students.
A statement from Ashford University said the following:
"Ashford University is committed to providing its students with the best opportunity to succeed, and, to that end; a reorganization of Ashford's student-facing staff has been implemented with the goal of improving student retention and academic success. As a result, 400 Ashford employees have been reassigned to roles that will support this new process and, regrettably, approximately 450 Ashford Admissions positions in San Diego and Denver have been eliminated."
By Consumer Bob, R. Stickney and Sarah Grieco
NBC 7 San Diego
Sep 25, 2012
Ashford University announced approximately 450 layoffs Monday morning. A majority of the layoffs were from San Diego, according to a school spokesperson Shari Rodriguez. Employees were told to come in early when they were shown a video and offered a two-week severance package.
Rodriguez says it is part of a company-wide reorganization.
“We were called in to this meeting that we were called in for on Friday, and we had no idea what this meeting was,” a laid off employees told NBC 7 San Diego. “This video comes on and within 30 seconds they’re like, ‘Your position no longer exists, you’re terminated.’”
Another former employee said she was in a room with 100 people when they were told by a human resources representative their positions no longer existed.
“They just said because of all the changes, they were getting laid off," she said. Employees said they were shocked by the news.
“Nobody expected it, it was a shock to everyone,” said a former employee in her 20s. “People were crying, people who have families, people who had just bought cars because they thought they had a stable job no longer have any of that.”
About a dozen former employees gathered at a Pacific Beach bar after they were told the news.
All laid off employees had worked for Ashford for less than six months and worked primarily in the recruitment area. An administrative employee told NBC 7 San Diego that many of those laid off were admissions counselors who dealt primarily with the students.
A statement from Ashford University said the following:
"Ashford University is committed to providing its students with the best opportunity to succeed, and, to that end; a reorganization of Ashford's student-facing staff has been implemented with the goal of improving student retention and academic success. As a result, 400 Ashford employees have been reassigned to roles that will support this new process and, regrettably, approximately 450 Ashford Admissions positions in San Diego and Denver have been eliminated."
Tuesday, July 31, 2012
Scathing report on for-profit colleges and their $32 billion in tax dollars
Scathing report on for-profit colleges and their $32 billion in tax dollars
July 30, 2012
by Maureen Downey
AJC Get Schooled blog
The for-profit colleges are taking billions in tax dollars with little to show for it, according to a report that will be issued today from a U.S. Senate committee.
Despite $32 billion in federal student aid to the colleges, most of the students never earn a degree, indicating that taxpayers are being saddled with a losing investment. However, the for-profits colleges don’t fail everyone, least of all their executives — the CEOs of the colleges were paid an average of $7.3 million, according to the report.
The scathing report states that more than 80 percent of the for-profit college revenues comes from taxpayers. Because of its larger and larger claim on tax dollars, the for-profit college industry has come under greater scrutiny. Latest numbers show that the for-profits enroll 13 percent of the nation’s college students. Yet, those students represent nearly half of all the defaults on college loans.
And government loans are the oil that keeps the for-profit college industry running. Nearly 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities.
According to Sen. Tom Harkin, who led the Senate investigation:
Enrollment at for-profit schools has grown dramatically over the past decade. Between 1998 and 2008, the number of students attending for-profit schools has grown from 553,000 to 1.8 million, an increase of more than 225 percent.
In order to drive enrollment growth, for-profit schools spend heavily on television advertisements, billboards, phone solicitation, and web marketing. The pressure on recruiters to enroll as many potential students as possible can give rise to recruiting practices that are overzealous or misleading.
For-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school.
For-profit schools provide access to many students who have historically not been well served by traditional institutions of higher education. But data collected by the Senate H.E.L.P. Committee shows that many for-profit schools are not providing the support structure to help these students succeed. The data shows that fifty-four percent of students who enrolled in the 2008-2009 school year withdrew by summer 2010.
Close to one in four students who attends a for-profit school defaults on his or her federal student loans within 3 years of leaving school. This high rate of default combined with the fact that nearly all students at for-profit schools must borrow money to pay the cost of tuition, has resulted in a sector that enrolls approximately 13 percent of American higher education students but accounts for nearly 50 percent of all student loan defaults.
Despite poor student outcomes, for-profit schools are highly profitable companies. Profits at 16 of the largest for-profit schools totaled $2.7 billion in 2009.
According to The New York Times:
“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,” Mr. Harkin, an Iowa Democrat who is chairman of the Senate Health, Education, Labor and Pensions Committee, said in a statement on Sunday. “These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.”
In a statement on Sunday, the Association of Private Sector Colleges and Universities, the leading trade group of for-profit colleges, called the report “the result of a flawed process that has unfairly targeted private-sector schools and their students.”
Over the last 15 years, enrollment and profits have skyrocketed in the industry. Until the 1990s, the sector was made up of small independent schools offering training in fields like air-conditioning repair and cosmetology. But from 1998 to 2008, enrollment more than tripled, to about 2.4 million students. Three-quarters are at colleges owned by huge publicly traded companies — and, more recently, private equity firms — offering a wide variety of programs.
Enrolling students, and getting their federal financial aid, is the heart of the business, and in 2010, the report found, the colleges studied had a total of 32,496 recruiters, compared with 3,512 career-services staff members.
Among the 30 companies, an average of 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction. Their chief executive officers were paid an average of $7.3 million, although Robert S. Silberman, the chief executive of Strayer Education, made $41 million in 2009, including stock options.
With the Department of Education seeking new regulations to ensure that for-profit programs provide training for “gainful employment,” the companies examined spent $8 million on lobbying in 2010, and another $8 million in the first nine months of 2011.
Many of the for-profit colleges, the report found, set tuition at almost exactly what a student could expect in maximum federal aid, including Pell grants and Stafford loans. According to a Bridgepoint Education document, when a new $400 “digital materials fee” would make students pay more than would be available from federal aid, the chief executive frantically wrote an e-mail to the finance officer to complain that the change was going to cause a “shortfall.” And documents from Alta Colleges mention restructuring schedules “so we can grab more of the students’ Stafford.”
July 30, 2012
by Maureen Downey
AJC Get Schooled blog
The for-profit colleges are taking billions in tax dollars with little to show for it, according to a report that will be issued today from a U.S. Senate committee.
Despite $32 billion in federal student aid to the colleges, most of the students never earn a degree, indicating that taxpayers are being saddled with a losing investment. However, the for-profits colleges don’t fail everyone, least of all their executives — the CEOs of the colleges were paid an average of $7.3 million, according to the report.
The scathing report states that more than 80 percent of the for-profit college revenues comes from taxpayers. Because of its larger and larger claim on tax dollars, the for-profit college industry has come under greater scrutiny. Latest numbers show that the for-profits enroll 13 percent of the nation’s college students. Yet, those students represent nearly half of all the defaults on college loans.
And government loans are the oil that keeps the for-profit college industry running. Nearly 96 percent of students at for-profit schools take out loans, compared with about 13 percent at community colleges and 48 percent at four-year public universities.
According to Sen. Tom Harkin, who led the Senate investigation:
Enrollment at for-profit schools has grown dramatically over the past decade. Between 1998 and 2008, the number of students attending for-profit schools has grown from 553,000 to 1.8 million, an increase of more than 225 percent.
In order to drive enrollment growth, for-profit schools spend heavily on television advertisements, billboards, phone solicitation, and web marketing. The pressure on recruiters to enroll as many potential students as possible can give rise to recruiting practices that are overzealous or misleading.
For-profit schools are far more expensive than comparable programs at community colleges or public universities. The average tuition for a for-profit school is about six times higher than a community college and twice as high as a 4-year public school.
For-profit schools provide access to many students who have historically not been well served by traditional institutions of higher education. But data collected by the Senate H.E.L.P. Committee shows that many for-profit schools are not providing the support structure to help these students succeed. The data shows that fifty-four percent of students who enrolled in the 2008-2009 school year withdrew by summer 2010.
Close to one in four students who attends a for-profit school defaults on his or her federal student loans within 3 years of leaving school. This high rate of default combined with the fact that nearly all students at for-profit schools must borrow money to pay the cost of tuition, has resulted in a sector that enrolls approximately 13 percent of American higher education students but accounts for nearly 50 percent of all student loan defaults.
Despite poor student outcomes, for-profit schools are highly profitable companies. Profits at 16 of the largest for-profit schools totaled $2.7 billion in 2009.
According to The New York Times:
“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation,” Mr. Harkin, an Iowa Democrat who is chairman of the Senate Health, Education, Labor and Pensions Committee, said in a statement on Sunday. “These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.”
In a statement on Sunday, the Association of Private Sector Colleges and Universities, the leading trade group of for-profit colleges, called the report “the result of a flawed process that has unfairly targeted private-sector schools and their students.”
Over the last 15 years, enrollment and profits have skyrocketed in the industry. Until the 1990s, the sector was made up of small independent schools offering training in fields like air-conditioning repair and cosmetology. But from 1998 to 2008, enrollment more than tripled, to about 2.4 million students. Three-quarters are at colleges owned by huge publicly traded companies — and, more recently, private equity firms — offering a wide variety of programs.
Enrolling students, and getting their federal financial aid, is the heart of the business, and in 2010, the report found, the colleges studied had a total of 32,496 recruiters, compared with 3,512 career-services staff members.
Among the 30 companies, an average of 22.4 percent of revenue went to marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction. Their chief executive officers were paid an average of $7.3 million, although Robert S. Silberman, the chief executive of Strayer Education, made $41 million in 2009, including stock options.
With the Department of Education seeking new regulations to ensure that for-profit programs provide training for “gainful employment,” the companies examined spent $8 million on lobbying in 2010, and another $8 million in the first nine months of 2011.
Many of the for-profit colleges, the report found, set tuition at almost exactly what a student could expect in maximum federal aid, including Pell grants and Stafford loans. According to a Bridgepoint Education document, when a new $400 “digital materials fee” would make students pay more than would be available from federal aid, the chief executive frantically wrote an e-mail to the finance officer to complain that the change was going to cause a “shortfall.” And documents from Alta Colleges mention restructuring schedules “so we can grab more of the students’ Stafford.”
Tuesday, July 10, 2012
Bridgepoint shares fall on accreditation denial
Bridgepoint shares fall on accreditation denial
AP News
July 09, 2012
Shares of Bridgepoint Education Inc. dropped more than 30 percent Monday after the for-profit education provider said a group that certifies schools denied an accreditation for one of its institutions.
THE SPARK: Bridgepoint's Ashford University, which has a campus in Clinton, Iowa, but mostly serves online students, was denied accreditation by the Western Association of Schools and Colleges. Without accreditation, a school can lose its access to federal financial aid, which can comprise as much as 90 percent of for-profit schools' revenue.
THE BIG PICTURE: The Western Association of Schools and Colleges is one of seven regional accrediting commissions. It has jurisdiction over schools located in California. Bridgepoint is based in San Diego.
In its letter to Ashford denying accreditation, the association said it found that the university hadn't shown substantial compliance with its accreditation standards related to student retention and graduation, the alignment of resources with educational objectives and the implementation of a core of full-time faculty that can oversee the university academic policies and ensure the integrity of its programs.
WASC noted that a large number of students who start degree programs at the university drop out, most within a short period of time. It said that over the past five years, 128,000 students have withdrawn from the university, while 240,000 new students have enrolled.
In addition, the university needs to put in place an effective system for assessing student learning and an "empowered and independent" governing board that has an acceptable relationship with Bridgepoint, WASC said in its letter...
AP News
July 09, 2012
Shares of Bridgepoint Education Inc. dropped more than 30 percent Monday after the for-profit education provider said a group that certifies schools denied an accreditation for one of its institutions.
THE SPARK: Bridgepoint's Ashford University, which has a campus in Clinton, Iowa, but mostly serves online students, was denied accreditation by the Western Association of Schools and Colleges. Without accreditation, a school can lose its access to federal financial aid, which can comprise as much as 90 percent of for-profit schools' revenue.
THE BIG PICTURE: The Western Association of Schools and Colleges is one of seven regional accrediting commissions. It has jurisdiction over schools located in California. Bridgepoint is based in San Diego.
In its letter to Ashford denying accreditation, the association said it found that the university hadn't shown substantial compliance with its accreditation standards related to student retention and graduation, the alignment of resources with educational objectives and the implementation of a core of full-time faculty that can oversee the university academic policies and ensure the integrity of its programs.
WASC noted that a large number of students who start degree programs at the university drop out, most within a short period of time. It said that over the past five years, 128,000 students have withdrawn from the university, while 240,000 new students have enrolled.
In addition, the university needs to put in place an effective system for assessing student learning and an "empowered and independent" governing board that has an acceptable relationship with Bridgepoint, WASC said in its letter...
Tuesday, June 05, 2012
America's Worst Educators
America’s worst colleges
How badly are for-profit schools serving young people? Corinthian Colleges embodies the industry's worst trends
BY ANDREW LEONARD
Salon.com
JUN 5, 2012
In the fall of 2010, three former students at Everest College, a for-profit career school in Salt Lake City, sued their school’s parent company, Corinthian Colleges...
A 13-page affidavit filed in the case by a former admissions officer, Shayler White, described a high-pressure recruitment process in which prospective students were barraged by phone calls multiple times a day and hustled through financial aid paperwork. With his employment contingent on meeting a strict enrollment quota, White made as many as 600 calls a month, and was, he said, instructed by his superiors to use bullying psychological tactics, to ask questions “designed at putting down the prospective student” and “making them feel hopeless.”
“The ultimate goal was to essentially make them wallow in their grief, feel that pain of having accomplished nothing in life, and then use that pain as their ‘reasons’ to compel the leads to schedule an in-person meeting with an Everest admissions representative.” ...Kent Jenkins, Corinthian’s current vice president for public affairs, deflected a question asking if White’s account accurately represented Corinthian’s recruitment process by noting that there has been no final disposition of the Utah suit. “There have been absolutely no court rulings that support any allegations” in the affidavit, he wrote in an email...
But generally speaking, there’s little question that an obsessive focus on constantly boosting enrollment is crucial to survival in the for-profit college world. Sky-high withdrawal rates plague the industry. It’s not uncommon for the biggest for-profits to enroll as many new students during the course of a single year as originally signed up for classes at the beginning of the year, a phenomenon referred to as “enrollment churn.” For example, Corinthian had 71,246 students in July 2008, enrolled 120,638 new students during the following year, but ended up with only 89,479 by June 30, 2009. Recruiting all those new bodies costs a lot of money. In 2009, Corinthian spent almost a quarter of its $1.3 billion in revenues on advertising and recruitment.
“They are, by and large, a marketing operation,” Sen. Dick Durbin, D-Ill., said in a speech on the Senate floor last September. “Bring the students in, sign them up, bring in the federal dollars; bring in more students, sign them up, bring in more federal dollars.”
Corinthian Colleges, in that respect, is no different from any other career school. But in an industry where bottom-line considerations often trump devotion to educational achievement, Corinthian invites scrutiny. Over the course of its 17-year history, the company has attracted numerous lawsuits. Corinthian schools have recorded some of the highest default rates on student loans in the country, a worrisome fact for a company that derives nearly 90 percent of its revenues from government loans and grants. If you want to understand why the Obama administration has been so steadfast in its efforts to crack down on the for-profit industry, Corinthian is as good a place as any to start.
Founded in Irvine, Calif., in 1995 by five veterans of the vocational school business, Corinthian’s strategy from the beginning was to purchase already existing schools and aggressively boost enrollment. The business plan was simple: grow, grow, grow....
Corinthian generates almost as much bad press as profit.
In 2004 former students filed three separate lawsuits in Florida alleging credit transfer fraud, claiming that Corinthian misled students as to whether their credits would be accepted by other educational institutions.
In 2005, Corinthian paid the Department of Education $776,241 for violations of student aid procedures at California’s Bryman College.
In 2007, reported the O.C. Register, Corinthian paid the state of California $6.5 million to settle charges of false advertising relating to allegedly overstating “the percentage of its students who obtained employment via its courses.”
Just three weeks ago, Corinthian revealed in a regulatory filing that the Consumer Financial Protection Bureau is investigating the company to “determine whether for-profit postsecondary companies, student loan origination and servicing providers, or other unnamed persons, have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing or origination of private student loans.”
But perhaps the most embarrassing twist in Corinthian’s recent history came earlier this year in California. In 2012, a new state law came into effect that denied colleges access to the state’s Cal Grants financial aid program if the three-year student loan default rate at an institution exceeded 24.6 percent. Of the state’s 165 for-profit schools, 67 failed the test. Eighteen of those 67 schools are owned by Corinthian. In fact, some of Corinthian’s schools exhibited default rates of over 40 percent. None of California’s public schools failed.
...The high costs, withdrawal and student loan default rates all help explain why the Obama administration pushed last year to institute new “gainful employment” rules that would require for-profit schools to prove that acceptable percentages of their graduates were paying down their debt after graduation. However, even those rules were extremely watered down, say higher education watchers, after extraordinary lobbying efforts from the for-profit sector, including Corinthian Colleges.
That’s right: Corinthian spent money generated from taxpayer-funded student loans to pay for lobbying efforts aimed to weaken rules designed to ensure that students get a good education and taxpayers get their money’s worth. If that doesn’t send you screaming to your nearest publicly funded community college, nothing will.
How badly are for-profit schools serving young people? Corinthian Colleges embodies the industry's worst trends
BY ANDREW LEONARD
Salon.com
JUN 5, 2012
In the fall of 2010, three former students at Everest College, a for-profit career school in Salt Lake City, sued their school’s parent company, Corinthian Colleges...
A 13-page affidavit filed in the case by a former admissions officer, Shayler White, described a high-pressure recruitment process in which prospective students were barraged by phone calls multiple times a day and hustled through financial aid paperwork. With his employment contingent on meeting a strict enrollment quota, White made as many as 600 calls a month, and was, he said, instructed by his superiors to use bullying psychological tactics, to ask questions “designed at putting down the prospective student” and “making them feel hopeless.”
“The ultimate goal was to essentially make them wallow in their grief, feel that pain of having accomplished nothing in life, and then use that pain as their ‘reasons’ to compel the leads to schedule an in-person meeting with an Everest admissions representative.” ...Kent Jenkins, Corinthian’s current vice president for public affairs, deflected a question asking if White’s account accurately represented Corinthian’s recruitment process by noting that there has been no final disposition of the Utah suit. “There have been absolutely no court rulings that support any allegations” in the affidavit, he wrote in an email...
But generally speaking, there’s little question that an obsessive focus on constantly boosting enrollment is crucial to survival in the for-profit college world. Sky-high withdrawal rates plague the industry. It’s not uncommon for the biggest for-profits to enroll as many new students during the course of a single year as originally signed up for classes at the beginning of the year, a phenomenon referred to as “enrollment churn.” For example, Corinthian had 71,246 students in July 2008, enrolled 120,638 new students during the following year, but ended up with only 89,479 by June 30, 2009. Recruiting all those new bodies costs a lot of money. In 2009, Corinthian spent almost a quarter of its $1.3 billion in revenues on advertising and recruitment.
“They are, by and large, a marketing operation,” Sen. Dick Durbin, D-Ill., said in a speech on the Senate floor last September. “Bring the students in, sign them up, bring in the federal dollars; bring in more students, sign them up, bring in more federal dollars.”
Corinthian Colleges, in that respect, is no different from any other career school. But in an industry where bottom-line considerations often trump devotion to educational achievement, Corinthian invites scrutiny. Over the course of its 17-year history, the company has attracted numerous lawsuits. Corinthian schools have recorded some of the highest default rates on student loans in the country, a worrisome fact for a company that derives nearly 90 percent of its revenues from government loans and grants. If you want to understand why the Obama administration has been so steadfast in its efforts to crack down on the for-profit industry, Corinthian is as good a place as any to start.
Founded in Irvine, Calif., in 1995 by five veterans of the vocational school business, Corinthian’s strategy from the beginning was to purchase already existing schools and aggressively boost enrollment. The business plan was simple: grow, grow, grow....
Corinthian generates almost as much bad press as profit.
In 2004 former students filed three separate lawsuits in Florida alleging credit transfer fraud, claiming that Corinthian misled students as to whether their credits would be accepted by other educational institutions.
In 2005, Corinthian paid the Department of Education $776,241 for violations of student aid procedures at California’s Bryman College.
In 2007, reported the O.C. Register, Corinthian paid the state of California $6.5 million to settle charges of false advertising relating to allegedly overstating “the percentage of its students who obtained employment via its courses.”
Just three weeks ago, Corinthian revealed in a regulatory filing that the Consumer Financial Protection Bureau is investigating the company to “determine whether for-profit postsecondary companies, student loan origination and servicing providers, or other unnamed persons, have engaged or are engaging in unlawful acts or practices relating to the advertising, marketing or origination of private student loans.”
But perhaps the most embarrassing twist in Corinthian’s recent history came earlier this year in California. In 2012, a new state law came into effect that denied colleges access to the state’s Cal Grants financial aid program if the three-year student loan default rate at an institution exceeded 24.6 percent. Of the state’s 165 for-profit schools, 67 failed the test. Eighteen of those 67 schools are owned by Corinthian. In fact, some of Corinthian’s schools exhibited default rates of over 40 percent. None of California’s public schools failed.
...The high costs, withdrawal and student loan default rates all help explain why the Obama administration pushed last year to institute new “gainful employment” rules that would require for-profit schools to prove that acceptable percentages of their graduates were paying down their debt after graduation. However, even those rules were extremely watered down, say higher education watchers, after extraordinary lobbying efforts from the for-profit sector, including Corinthian Colleges.
That’s right: Corinthian spent money generated from taxpayer-funded student loans to pay for lobbying efforts aimed to weaken rules designed to ensure that students get a good education and taxpayers get their money’s worth. If that doesn’t send you screaming to your nearest publicly funded community college, nothing will.
Friday, April 27, 2012
Is Bridgepoint Education targeting veterans for easy money?
Profits and Scrutiny for Colleges Courting Veterans
The New York Times
By ERIC LIPTON
December 8, 2010
When Congress moved in 2008 to sweeten tuition payments for veterans, it was celebrated as a way to ensure that military personnel returning from Iraq and Afghanistan could go to college at no cost and to replicate the historic benefits society gained from the G.I. Bill after World War II.
Now, a year after payouts on the so-called Post-9/11 G.I. Bill started, the huge program has turned into a bonanza of another kind for the many commercial colleges in the United States that have seen their military revenues surge.
More than 36 percent of the tuition payments made in the first year of the program — a total of $640 million in tuition and fees — went to for-profit colleges, like the University of Phoenix, according to data compiled by the Department of Veterans Affairs, even though these colleges serve only about 9 percent of the overall population at higher education institutions nationwide.
As the money flows to the for-profit university industry, questions are being raised in Congress and elsewhere about their recruitment practices, and whether they really deliver on their education promises. Some members say they want to place tighter limits on how much these colleges can collect in military benefits, a move certain federal officials say they would welcome...
Amid this debate, the industry’s powerful lobbying forces are pushing for even more, including a change in the law that would allow veterans who sign up exclusively for online classes to also get government housing subsidies, even if they live at home, which would make online education even more attractive.
With their multimillion-dollar advertising and recruitment campaigns, these colleges have pitched themselves as a natural choice for veterans and active-duty personnel, given their extensive online class offerings, accelerated degree programs and campuses spread across the nation, including near many military bases.
...ECPI College of Technology, a Virginia institution with a major online program and campuses in three states that collected $16 million in G.I. Bill benefits in the first year.
Active-duty personnel are eligible for free tuition, which explains why the for-profit colleges have received about $200 million in Department of Defense tuition reimbursement benefits and fees in the last year, mostly for online classes, in addition to money collected from the G.I. Bill.
But high dropout rates at some of these colleges, difficulty in transferring credits, higher tuition bills than at public colleges and skepticism from some employers about the value of the degrees are all creating unease among some in Congress.
“For-profit schools see our active-duty military and veterans as a cash cow..."
It is a concern echoed by eight current and former recruiters from some of the nation’s largest for-profit chains, who in interviews said the intense drive to enroll veterans had led them, at times, to sign up military personnel for classes when they were all but certain they would drop out or fail.
“There is such pressure to simply enroll more vets — we knew that most of them would drop out after the first session,” said Jason Deatherage, who worked as military admissions adviser at Colorado Technical University until this spring, when he was fired, he said, for not meeting his quota. “Instead of helping people, too often I felt like we were almost tricking them.”
...“I felt like I made a horrible, horrible decision,” said Jason Longmore, 31, a Navy veteran...forcing him to repeat classes elsewhere before he could transfer credits to a Colorado state university...some of the for-profit colleges hounded active-duty personnel there as they pursued “hot leads,” calling them repeatedly to get a piece of the military tuition grants.
Mr. Songer said that he was not opposed to the colleges, but that they often enrolled Marines in classes of limited educational value. In some cases, the colleges even take out high-interest-rate loans on behalf of the Marines to cover extra costs, he said.
Friday, August 12, 2011
For-Profit College Group Sued as U.S. Lays Out Wide Fraud
For-Profit College Group Sued as U.S. Lays Out Wide Fraud
By TAMAR LEWIN
New York Times
August 8, 2011
The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.
While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.
“The depth and breadth of the fraud laid out in the complaint are astonishing,” said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit. “It spans the entire company — from the ground level in over 100 separate institutions up to the most senior management — and accounts for nearly all the revenues the company has realized since 2003.”
Education Management, which is based in Pittsburgh and is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools operating under four names: Art Institute, Argosy University, Brown Mackie College and South University. ..
By TAMAR LEWIN
New York Times
August 8, 2011
The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Management Corporation, the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.
While the civil lawsuit is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.
“The depth and breadth of the fraud laid out in the complaint are astonishing,” said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit. “It spans the entire company — from the ground level in over 100 separate institutions up to the most senior management — and accounts for nearly all the revenues the company has realized since 2003.”
Education Management, which is based in Pittsburgh and is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools operating under four names: Art Institute, Argosy University, Brown Mackie College and South University. ..
Tuesday, July 05, 2011
Frontline Examines Bridgepoint Education
I recommend clicking on the headline below to get the original story with many good links in the text:
Frontline Examines Bridgepoint Education
Jun 29, 2011.
by Will Carless
The PBS public affairs show Frontline aired a show on the for-profit education sector last night that focused on the education of military personnel and veterans and took a close look at San Diego-based Bridgepoint Education.
Bridgepoint, which my colleague Liam Dillon and I looked at in our story about the company's extraordinary growth and controversial history, has become one of the largest private employers in San Diego County in recent years.
In its piece, "Educating Sergeant Pantzke," Frontline interviewed two former employees of Ashford University, one of Bridgepoint's two online campuses, who criticized their former employer. Former Ashford enrollment advisor Wade Cutler said he wasn't discouraged to sign up applicants who weren't ready for study.
"They don't say that," Cutler said.
"What do they say?" the interviewer asked.
"They say everybody is a good fit. The military is a perfect fit."
Here's the Frontline video:
Educating Sergeant Pantzke
For-profit colleges promise veterans a high quality degree -- but do they deliver?
The piece examines a trend that has raised concern in the U.S. Senate and in several states across the country. As for-profit universities have boomed, they've attracted a significant share of their revenue from students in the military who pay for their studies via the federal G.I. Bill.
That's a concern to Iowa Democratic Sen. Tom Harkin, who has used the committee he chairs, the Health, Education Labor and Pensions Committee, to criticize the for-profit education industry and Bridgepoint. From our previous story:
Harkin zeroed in on Bridgepoint two weeks ago in the latest in a series of hearings he has been holding about the for-profit education business. In a lengthy denunciation of the company, Harkin lambasted Bridgepoint for duplicity in its marketing, lavish executive compensation and dismal dropout rates.
The senator pointed out that while Bridgepoint was making record profits last year, 84 percent of the students in its two-year programs were dropping out, according to a sampling of students by his committee.
"In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure," Harkin said.
Since the hearing, Harkin has announced that he plans to introduce legislation to tighten the regulation of the for-profit education industry.
Since we wrote our story about Bridgepoint, we've also blogged about the company's continued explosive growth, an investigation of the company by New York's attorney general, and Bridgepoint's boost from weaker-than-expected new U.S. Department of Education federal aid guidelines.
Frontline Examines Bridgepoint Education
Jun 29, 2011.
by Will Carless
The PBS public affairs show Frontline aired a show on the for-profit education sector last night that focused on the education of military personnel and veterans and took a close look at San Diego-based Bridgepoint Education.
Bridgepoint, which my colleague Liam Dillon and I looked at in our story about the company's extraordinary growth and controversial history, has become one of the largest private employers in San Diego County in recent years.
In its piece, "Educating Sergeant Pantzke," Frontline interviewed two former employees of Ashford University, one of Bridgepoint's two online campuses, who criticized their former employer. Former Ashford enrollment advisor Wade Cutler said he wasn't discouraged to sign up applicants who weren't ready for study.
"They don't say that," Cutler said.
"What do they say?" the interviewer asked.
"They say everybody is a good fit. The military is a perfect fit."
Here's the Frontline video:
Educating Sergeant Pantzke
For-profit colleges promise veterans a high quality degree -- but do they deliver?
The piece examines a trend that has raised concern in the U.S. Senate and in several states across the country. As for-profit universities have boomed, they've attracted a significant share of their revenue from students in the military who pay for their studies via the federal G.I. Bill.
That's a concern to Iowa Democratic Sen. Tom Harkin, who has used the committee he chairs, the Health, Education Labor and Pensions Committee, to criticize the for-profit education industry and Bridgepoint. From our previous story:
Harkin zeroed in on Bridgepoint two weeks ago in the latest in a series of hearings he has been holding about the for-profit education business. In a lengthy denunciation of the company, Harkin lambasted Bridgepoint for duplicity in its marketing, lavish executive compensation and dismal dropout rates.
The senator pointed out that while Bridgepoint was making record profits last year, 84 percent of the students in its two-year programs were dropping out, according to a sampling of students by his committee.
"In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure," Harkin said.
Since the hearing, Harkin has announced that he plans to introduce legislation to tighten the regulation of the for-profit education industry.
Since we wrote our story about Bridgepoint, we've also blogged about the company's continued explosive growth, an investigation of the company by New York's attorney general, and Bridgepoint's boost from weaker-than-expected new U.S. Department of Education federal aid guidelines.
Thursday, March 24, 2011
Bridgepoint: Education Scam or Economic Engine?
See all posts on for-profit education companies.
See all Bridgepoint posts.
Education Scam or Economic Engine
Bridgepoint Booms Over Troubled Waters
It's the fifth-largest private employer in the county and spreads money around through political lobbying and sponsorships of events like the Holiday Bowl. But just a few years ago you probably wouldn't have known it. Neither would have its many critics, including a U.S. senator who called it "an absolute scam."
The company is Bridgepoint Education, a for-profit company that owns two universities and educates 99 percent of its students online.
"Criticism of the company centers on its remarkable ability to attract students and remarkable failure to graduate them, all while receiving hundreds of millions in federal student aid dollars," Liam Dillon and Will Carless report. "The complaint: Bridgepoint has set up a system to use federal dollars to line investors' pockets rather than enrich students' minds."
Bridgepoint matters locally because of its jobs, money, and influence. One study concluded that Bridgepoint added, directly or indirectly, more than $500 million to the local economy. Since that report was written, the company has grown even bigger, which means Bridgepoint's ability to withstand lawsuits and attacks from critics will have a direct impact on San Diego's well-being.
See all Bridgepoint posts.
Education Scam or Economic Engine
Bridgepoint Booms Over Troubled Waters
It's the fifth-largest private employer in the county and spreads money around through political lobbying and sponsorships of events like the Holiday Bowl. But just a few years ago you probably wouldn't have known it. Neither would have its many critics, including a U.S. senator who called it "an absolute scam."
The company is Bridgepoint Education, a for-profit company that owns two universities and educates 99 percent of its students online.
"Criticism of the company centers on its remarkable ability to attract students and remarkable failure to graduate them, all while receiving hundreds of millions in federal student aid dollars," Liam Dillon and Will Carless report. "The complaint: Bridgepoint has set up a system to use federal dollars to line investors' pockets rather than enrich students' minds."
Bridgepoint matters locally because of its jobs, money, and influence. One study concluded that Bridgepoint added, directly or indirectly, more than $500 million to the local economy. Since that report was written, the company has grown even bigger, which means Bridgepoint's ability to withstand lawsuits and attacks from critics will have a direct impact on San Diego's well-being.
Tuesday, February 08, 2011
You Can Get Into College, But Maybe Not Out
Black and Latino students were also more likely to go to for-profit colleges than white or Asian students, something that raises worries, said Michele Siqueiros, executive director of the Campaign for College Opportunity. Such colleges have been criticized for saddling students with unaffordable debt.
See all posts on for-profit education.
See all posts on for-profit college recruiting.
You Can Get Into College, But Maybe Not Out
February 7, 2011
Voice of San Diego
by Emily Alpert
Only 35 percent of students who entered a community college in San Diego and Imperial counties completed a certificate, a degree or transferred to a university within six years, a new report has found.
That remarkable statistic underscores a problem that I want to pay more attention to as an education reporter: School districts aim to get students to college and often measure their success that way. But getting into college is just the beginning. What happens to students after they get there?
The sweeping study followed more than 250,000 students statewide who entered California community colleges in 2003 and traced their progress over six years. The research was commissioned by the Campaign for College Opportunity, a Los Angeles-based nonprofit that aims to increase college graduation rates.
Community college students in the San Diego and Imperial region, which was grouped together, were slightly more successful than the state average in getting diplomas and credentials or transferring out.
But problems in the region still echoed the statewide issues that the Campaign for College Opportunity is spotlighting, especially when it comes to racial gaps: Latino students here were less likely to successfully complete a degree or certificate or transfer to a university from community college, for instance.
Black and Latino students were also more likely to go to for-profit colleges than white or Asian students, something that raises worries, said Michele Siqueiros, executive director of the Campaign for College Opportunity. Such colleges have been criticized for saddling students with unaffordable debt...
See all posts on for-profit education.
See all posts on for-profit college recruiting.
You Can Get Into College, But Maybe Not Out
February 7, 2011
Voice of San Diego
by Emily Alpert
Only 35 percent of students who entered a community college in San Diego and Imperial counties completed a certificate, a degree or transferred to a university within six years, a new report has found.
That remarkable statistic underscores a problem that I want to pay more attention to as an education reporter: School districts aim to get students to college and often measure their success that way. But getting into college is just the beginning. What happens to students after they get there?
The sweeping study followed more than 250,000 students statewide who entered California community colleges in 2003 and traced their progress over six years. The research was commissioned by the Campaign for College Opportunity, a Los Angeles-based nonprofit that aims to increase college graduation rates.
Community college students in the San Diego and Imperial region, which was grouped together, were slightly more successful than the state average in getting diplomas and credentials or transferring out.
But problems in the region still echoed the statewide issues that the Campaign for College Opportunity is spotlighting, especially when it comes to racial gaps: Latino students here were less likely to successfully complete a degree or certificate or transfer to a university from community college, for instance.
Black and Latino students were also more likely to go to for-profit colleges than white or Asian students, something that raises worries, said Michele Siqueiros, executive director of the Campaign for College Opportunity. Such colleges have been criticized for saddling students with unaffordable debt...
Friday, January 28, 2011
Efforts to Stop the Practice of Recruiting for Commission in Private Universities
See all posts on for-profit education.
See all posts on for-profit college recruiting.
Efforts to Stop the Practice of Recruiting for Commission in Private Universities
This guest post is contributed by Mark Davies, he writes on the topic of Masters Degree Online. He welcomes your comments at his email id: markdavies247@gmail.com.
Education has become more of a commodity these days than the essential right that it should be; what with exorbitantly high tuition fees and the rising overall cost of education, students end up paying through their nose for the rest of their lives if they sign on for a college degree. What’s worse in recent times is that private, for-profit colleges have taken to hiring people to recruit students for their courses; it’s a commission-based business which leads to a payment once a student enrolls based on their recommendations and marketing.
This alarming trend is surprising in one way because we’ve seen how hard it is to get admission into a decent college. So the news that private colleges are looking to reel in students by hiring commissioned agents to sweet-talk them raises red flags for more reasons than one. For one, it opens up the possibility of corruption in the world of education where degrees are sold to the highest bidder and where standards are not maintained; and for another, it allows colleges to fleece students and charge them much more than normal by preying on their desperation to earn a degree.
In August 2010, the Government Accountability Office reported that several for-profit institutions adopted deceptive recruiting practices which included providing misleading information about costs and potential future earnings and urging students to provide falsified information on financial aid applications. The revelations were part of an undercover investigation into the recruiting practices of colleges by investigators posing as prospective students. It was found that most institutions engage in deceptive practices and some even in downright fraud.
Students sign up thinking they’re investing in an education for their future; instead, they’re forced to pay much more than normal, they’re conned into providing false information on their applications for financial assistance, they’re given false promises of jobs with high salaries when they graduate, and they’re coerced into taking out student loans even though they have money saved up. Recruiters even go so far as to tell the students that “no one repays educational loans and that your lender will not come after you if you fail to pay up.”
Most recently, the parent company of the University of Phoenix paid up nearly $80 million to settle charges with the US Department of Education that it had violated a federal ban to reimburse recruiters based on the number of students they recruited. Also, in 2007, Corinthian Schools settled for $6.5 million with the California Attorney General’s office for using false information on job salary and placement to lure students to sign up with them.
According to the US Public Interest Research Group and the US Student Association, there is enough evidence to prove that the career education sector relies on high pressure sales tactics to recruit students; what’s worse is that these recruiters also coerce these students with false information to take out loans to pay for programs that offer them little by way of return and only serve to saddle them with lifelong debt. This group is pushing for regulations that would protect students from these unscrupulous practices.
Accordingly, new program integrity rules have been introduced to maintain the quality of federal financial aid programs and protect students enrolled in vocational courses. The US Department of Education is hoping to curb these deceptive practices by looking into and rectifying loopholes in regulations that allow schools to pay recruiters based on the number of students they recruit and the amount the students have borrowed.
Even though federal law prohibits schools from offering financial incentives or commissions to recruiters, educational institutions still persist with this practice; and unless strict measures are taken to curb these practices, students from minorities and low income families will be the ones who bear the brunt of them and be saddled with debt for a lifetime just because they aspired to gain an education.
See all posts on for-profit college recruiting.
Efforts to Stop the Practice of Recruiting for Commission in Private Universities
This guest post is contributed by Mark Davies, he writes on the topic of Masters Degree Online. He welcomes your comments at his email id: markdavies247@gmail.com.
Education has become more of a commodity these days than the essential right that it should be; what with exorbitantly high tuition fees and the rising overall cost of education, students end up paying through their nose for the rest of their lives if they sign on for a college degree. What’s worse in recent times is that private, for-profit colleges have taken to hiring people to recruit students for their courses; it’s a commission-based business which leads to a payment once a student enrolls based on their recommendations and marketing.
This alarming trend is surprising in one way because we’ve seen how hard it is to get admission into a decent college. So the news that private colleges are looking to reel in students by hiring commissioned agents to sweet-talk them raises red flags for more reasons than one. For one, it opens up the possibility of corruption in the world of education where degrees are sold to the highest bidder and where standards are not maintained; and for another, it allows colleges to fleece students and charge them much more than normal by preying on their desperation to earn a degree.
In August 2010, the Government Accountability Office reported that several for-profit institutions adopted deceptive recruiting practices which included providing misleading information about costs and potential future earnings and urging students to provide falsified information on financial aid applications. The revelations were part of an undercover investigation into the recruiting practices of colleges by investigators posing as prospective students. It was found that most institutions engage in deceptive practices and some even in downright fraud.
Students sign up thinking they’re investing in an education for their future; instead, they’re forced to pay much more than normal, they’re conned into providing false information on their applications for financial assistance, they’re given false promises of jobs with high salaries when they graduate, and they’re coerced into taking out student loans even though they have money saved up. Recruiters even go so far as to tell the students that “no one repays educational loans and that your lender will not come after you if you fail to pay up.”
Most recently, the parent company of the University of Phoenix paid up nearly $80 million to settle charges with the US Department of Education that it had violated a federal ban to reimburse recruiters based on the number of students they recruited. Also, in 2007, Corinthian Schools settled for $6.5 million with the California Attorney General’s office for using false information on job salary and placement to lure students to sign up with them.
According to the US Public Interest Research Group and the US Student Association, there is enough evidence to prove that the career education sector relies on high pressure sales tactics to recruit students; what’s worse is that these recruiters also coerce these students with false information to take out loans to pay for programs that offer them little by way of return and only serve to saddle them with lifelong debt. This group is pushing for regulations that would protect students from these unscrupulous practices.
Accordingly, new program integrity rules have been introduced to maintain the quality of federal financial aid programs and protect students enrolled in vocational courses. The US Department of Education is hoping to curb these deceptive practices by looking into and rectifying loopholes in regulations that allow schools to pay recruiters based on the number of students they recruit and the amount the students have borrowed.
Even though federal law prohibits schools from offering financial incentives or commissions to recruiters, educational institutions still persist with this practice; and unless strict measures are taken to curb these practices, students from minorities and low income families will be the ones who bear the brunt of them and be saddled with debt for a lifetime just because they aspired to gain an education.
Saturday, January 22, 2011
For-profit college group sues to block federal rules
Too many tax dollars go to private schools that take the money but don't provide the education that's promised. I agree that recruiters should not get commissions for signing up students with government benefits. It's a recipe for fraud.
See all posts on for-profit education.
See all posts on for-profit college recruiting.
For-profit college group sues to block federal rules
By Nick Anderson
Washington Post
January 22, 2011
A group representing for-profit colleges sued the Education Department on Friday to try to block new federal rules relating to how the schools pay recruiters, how they represent themselves to prospective students and how states oversee their activities.
The Association of Private Sector Colleges and Universities alleges in the lawsuit, filed in the U.S. District Court for the District of Columbia, that the regulations published in late October are unconstitutional and violate federal administrative law.
The association represents 1,500 for-profit schools, including those operated by The Washington Post Co.'s Kaplan unit and several other publicly traded companies.
At issue in the suit are three regulations scheduled to take effect July 1.
One specifies minimum steps a state must take to authorize postsecondary programs that participate in federal student aid programs. Another strengthens federal authority to take action against schools that engage in deceptive marketing. A third reinforces a federal law that prohibits schools from paying recruiters based solely on how many students enroll.
Administration officials describe the proposed rules as responses to reports of abuses in the for-profit sector of higher education. "We're confident that the published regulations will do the best job of protecting students and taxpayers," said Justin Hamilton, a spokesman for the Education Department.
Harris Miller, the association's president, called the rules "vague and poorly written" and said "They will have a chilling effect on job creation and innovation."
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The suit does not address the department's proposal to require for-profit schools to take steps to contain student debt and increase loan repayment rates. The proposed "gainful employment" rules, which the industry has fiercely opposed, are still pending. The Obama administration has said it aims to publish a final version of those rules early this year.
See all posts on for-profit education.
See all posts on for-profit college recruiting.
For-profit college group sues to block federal rules
By Nick Anderson
Washington Post
January 22, 2011
A group representing for-profit colleges sued the Education Department on Friday to try to block new federal rules relating to how the schools pay recruiters, how they represent themselves to prospective students and how states oversee their activities.
The Association of Private Sector Colleges and Universities alleges in the lawsuit, filed in the U.S. District Court for the District of Columbia, that the regulations published in late October are unconstitutional and violate federal administrative law.
The association represents 1,500 for-profit schools, including those operated by The Washington Post Co.'s Kaplan unit and several other publicly traded companies.
At issue in the suit are three regulations scheduled to take effect July 1.
One specifies minimum steps a state must take to authorize postsecondary programs that participate in federal student aid programs. Another strengthens federal authority to take action against schools that engage in deceptive marketing. A third reinforces a federal law that prohibits schools from paying recruiters based solely on how many students enroll.
Administration officials describe the proposed rules as responses to reports of abuses in the for-profit sector of higher education. "We're confident that the published regulations will do the best job of protecting students and taxpayers," said Justin Hamilton, a spokesman for the Education Department.
Harris Miller, the association's president, called the rules "vague and poorly written" and said "They will have a chilling effect on job creation and innovation."
ad_icon
The suit does not address the department's proposal to require for-profit schools to take steps to contain student debt and increase loan repayment rates. The proposed "gainful employment" rules, which the industry has fiercely opposed, are still pending. The Obama administration has said it aims to publish a final version of those rules early this year.
Tuesday, June 15, 2010
Obama Targets For-Profit College Recruiting in Proposed Rules
See all posts on for-profit education.
See all posts on for-profit college recruiting.
Obama Targets For-Profit College Recruiting in Proposed Rules
By John Hechinger
June 16, 2010
Bloomberg
The Obama administration proposed banning for-profit colleges from tying recruiters’ pay 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., Career Education Corp. and other for-profit colleges, according to a copy of the proposal by the U.S. Department of Education to be made public today. 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. Federal aid to for-profit colleges jumped to $26.5 billion last year from $4.6 billion in 2000, according to the Education Department...
See all posts on for-profit college recruiting.
Obama Targets For-Profit College Recruiting in Proposed Rules
By John Hechinger
June 16, 2010
Bloomberg
The Obama administration proposed banning for-profit colleges from tying recruiters’ pay 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., Career Education Corp. and other for-profit colleges, according to a copy of the proposal by the U.S. Department of Education to be made public today. 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. Federal aid to for-profit colleges jumped to $26.5 billion last year from $4.6 billion in 2000, according to the Education Department...
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