MARYLAND IS EXPANDING THESE FOR-PROFITS ESPECIALLY AIMED AT LOW-INCOME/POOR STUDENTS. SOUND LIKE THE 'KOOL SMILES' DENTRISTY FRAUD? IT IS!
BELOW IS A CONVERSATION WITH A FOR-PROFIT COLLEGE COMPANY OWNER. HE'S BASICALLY SAYING THAT DISPITE ALL THE BAD PRESS ON FOR-PROFIT CAREER COLLEGES, THEY ARE GOING TO CHANGE THEIR WAYS. WALL STREET IS JUST GOING TO HAVE TO LET UP ON ALL THAT MAKES THESE COLLEGES WORTHLESS HE SAYS.
College Inc. by Frontline / PBS
Talk about Wall Street a little bit more -- what they're looking for in terms of margins, in terms of growth, and where that takes the business.
I think Wall Street is looking for stability. Wall Street would rather see a school like Strayer [University], for example, who has had very calculated, conservative growth over a 15-year period. I think Wall Street likes to see predictability. They like to take all the risk out of a situation more than they like to see rapid growth or fluctuations up or down.
I think Wall Street is very interested in public-private partnerships. They're trying to figure that out right now. And I would not be surprised if we didn't see a state school form some sort of a strategic alliance with a Wall Street firm to privatize a public asset for the public good.
There's a number of criticisms, though, that say that the numbers that Wall Street is looking for are forcing a lot of the for-profit schools or some of the for-profit schools to push for steady outgrowth.
Absolutely true. Absolutely true. That is a dynamic tension that the academic community in the nonprofit and for-profit sectors are going to have to reconcile.
Tell me what's happening, from the beginning.
The greed factor on Wall Street pushes some of the for-profit schools for growth. But what has happened, since essentially a new industry -- but publicly traded schools are so new that the CEOs have matured very quickly and said: "Hey, we're not going to give you the kind of growth you want. We're going to cap our growth. We're going to be very measured." ...
So I think Wall Street is going to have to come to terms with the fact that the good operators, the people at DeVry [University], at University of Phoenix, at Strayer, they're slowing down their growth. They're focusing on quality. And this is a long-term business. This is not an Internet boom. This is not something that, boom, you make a ton of money and go home. These people are in it for the long haul.
But we've seen enormous growth over the last 10 years.
What was happening?
The Internet. That same growth is taking place in the state schools as well. You just don't hear about it because it doesn't have the headline factor. But you're seeing the University of Maryland is up to hundreds of thousands of students online. Rio Salado Communication College, Maricopa Community College[s] went from no online students to 80,000 online students -- with no marketing, by the way, no marketing budget. So the convenience factor and the high-quality delivery systems combined with younger academics, the acceptance level of the Internet, the acceptance level of distance learning with a younger faculty is propelling us. ...
What about the retention rates of these online enrollees, online students?
I think it's too early to do accurate studies on it. I think that we're going to find that the proprietary schools do a better job at retention because all of their metrics and their cost structures are based on getting a student to graduation. ...
The state schools, on the other hand, have a mission where they have to teach everybody no matter what, so they're operating at a little bit of a disadvantage where they really can't say no to too many students because their mission is to educate everyone. So their retention rates, their completion rates are going to be worse than a school that can be a little more selective on what kind of students come in and how much money can be spent on the student services.
Recently the University of Phoenix enrolled 100,000 students in the recent quarter and [reported] that 50,000 of them have dropped out by the end of the quarter.
I think it's unfair to state those metrics in that manner, shape or form. And when I said the industry is so young, it's hard to tell. These are working adults, and there's a lot of life factors to take into effect. ...
I think over a 20-, 30-, 40-year period when we have the data and we have the research, we're going to find there's a lot of these adult students that are transferring in and out of a school. ...
I think you're seeing a lot of students hopping from online school to online school, which makes one school maybe look like its retention amount is good. But we just don't have enough data yet.
OBAMA CAMPAIGNED ON REFORMING THESE FOR-PROFIT SCHOOLS AND WHEN HIS EDUCATION REGULATORS RELEASED THE RULES, THEY WERE SO WATERED-DOWN AS TO NOT SERVE ANY PURPOSE OTHER THAN TO LET THESE SCHOOLS CONTINUE TO SUCK TREMENDOUS PROFITS FROM FEDERAL STUDENT LOANS. THINK ABOUT ENFORCEMENT----IN MARYLAND, WE DON'T HAVE ENFORCEMENT. YOU CAN JUST SEE THEM SITTING AROUND A TABLE LAUGHING AT THAT ONE!
Originally published Monday, June 25, 2012 at 9:03 PM Seattle Times
Feds: For-profits could lose federal student aid Former students in career-training programs at dozens of for-profit institutions have had so much trouble paying off their loans that the schools could lose access to federal student aid if they don't improve, new data from the U.S. Department of Education finds.
By CHRISTINE ARMARIO
Former students in career-training programs at dozens of for-profit institutions have had so much trouble paying off their loans that the schools could lose access to federal student aid if they don't improve, new data from the U.S. Department of Education finds.
The Education Department reported that at 193 programs at 93 schools, students were unable to meet any of three measures under the agency's new "gainful employment" rule. The new regulations, announced by the Obama administration last year, are aimed at making sure students in career-training programs at for-profit, nonprofit and public institutions are able to get a job and pay off their student loans when they graduate.
The programs include Everest College's paralegal training in Salt Lake City and more than 40 other programs operated by Corinthian Colleges, one of the nation's largest higher education companies; chef training at Le Cordon Bleu College of Culinary Arts in Austin, Texas; and the medical assistant program at Sanford-Brown College in McLean, Va.
"Career colleges have a responsibility to prepare people for jobs at a price they can afford," Education Secretary Arne Duncan said. "Schools that cannot meet these very reasonable standards are on notice: invest in your students' success, or taxpayers can no longer invest in you."
The Education Department considers former students "gainfully employed" if the program they participated in meets one of three metrics: The estimated annual loan payments for a typical graduate does not exceed 30 percent of his or her discretionary income or 12 percent of total earnings; or at least 35 percent of former students are repaying their loans.
"These aren't the strictest standards to live up to," said Stephen Burd, a senior policy analyst at the New America Foundation, a nonpartisan public policy institute. That there are programs at 93 schools that don't meet any of the three "should raise alarms, and the fact we aren't doing anything about them for a long while from now is worrisome."
Twelve percent of all students in higher education attend a for-profit institution, yet they represent 46 percent of all student loan dollars in default. While students who attend community colleges usually do not have to borrow money to enroll, the median federal student loan debt for a student earning an associate's degree at a for-profit was $14,000.
Meanwhile, for more than a quarter of for-profit schools, 80 percent of their revenue consists of federal student aid, the Department of Education said in announcing the finalized rule last year.
The department estimated 8 percent of all career programs would fail to meet the three benchmarks at some point in time, while only 2 percent would eventually lose student aid eligibility.
The data being released Wednesday covers 3,695 programs in 1,335 schools over a two-year period. Of those, 35 percent met all three measurements; 31 percent met two; 29 percent met one and 5 percent did not meet any of the three metrics.
Burd said many had expected the number who failed all three of the benchmarks to be much higher. Nonetheless, he said the data raises serious questions about the quality of training that students are receiving at institutions that didn't meet any of the benchmarks.
"If we're seeing they're failing all three metrics and we're not taking any action related to that, it's putting students in harm's way," he said.
All of the data to be released Wednesday is strictly for informational purposes and to give the schools an opportunity to review and work on improving their student outcomes, the department said. Enforcement will begin this fall, though schools would need to fail for three out of four years in order to lose access to federal student aid.
THIS IS WHAT WAS SUPPOSED TO BE FIXED BY THESE NEW LAWS VCOMING INTO PLACE IN THE FALL.......MARYLAND IS EXPANDING THESE FOR-PROFITS ESPECIALLY AIMED AT LOW-INCOME/POOR STUDENTS. SOUND LIKE THE 'KOOL SMILES' DENTRISTY FRAUD? IT IS!
February 11, 2009 7:37 PM
For-Profit College: Costly Lesson By Rebecca Leung 60 Minutes
Are you interested in a new career? Are you looking for specialized training and a high-paying job in computers, fashion or health care?
Well, a lot of people must be, because companies selling that dream, the for-profit career colleges, are one of the fastest growing area in the field of education.
It's a multi-billion dollar business with most of the revenues guaranteed by the federal government, and until recently the industry was the darling of Wall Street.
Now, it's under scrutiny, with one of the biggest players facing allegations that it deceived investors, the federal government, and students, who say they've been taught a very expensive lesson. Correspondent Steve Kroft reports. If you've ever watched daytime TV, you've probably seen one of Career Education Corporation's ads offering students a brand-new life.
"Ever think you could be part of this? With the right training, you can!"
That one was for the Katharine Gibbs schools, which were bought by Career Education Corporation in 1997, and make up just a small part of its scholastic empire.
A year ago, CEC was one the hottest stocks on the NASDAQ exchange, with five years of record growth and $1 billion in annual revenue. It comes from nearly 100,000 students at 82 different campuses, taking classes in everything from computer animation to the culinary arts.
Brooks College in Long Beach, Calif., offers training in fashion and design, but its graduates have a special nickname for their alma mater: "Crooks College."
"Cuz they robbed us," says one graduate.
"Everything was a lie," says another.
What was the biggest lie?
"Job placement -- 98 percent job placement," several graduates said. "They said, like, starting $30,000 a year, $30,000 or more."
Brooke Shoelberg, Chanee Thurston, and Amanda Harris enrolled to study fashion merchandising after the school signed them up for tens of thousands of dollars in student loans, and showed them videos promising to help them get jobs with companies like Giorgio Armani.
Did Brooks College find any of them a job? No, they said.
Did it make an attempt to find them a job? Again, they said no.
The school declined to comment, but 60 Minutes knows that all three women graduated near the top of their classes. A year later, none had been able to find the kind of job she was supposedly trained for.
Brooke was managing a telephone store; Amanda was unemployed; and Chanee was selling T-shirts. All of them went heavily into debt to get a two-year degree they now believe has little value.
"The school has no credibility with the fashion industry, whatsoever," says Thurston.
Complaints, laid out in a number of lawsuits against CEC by former students, investors, and employees, are now under investigation by the Justice Department and the Securities and Exchange Commission.
The lawsuits and the investigations were cited by CEC as the reason for declining a request by 60 Minutes for an on-camera interview.
But there were plenty of other people willing to talk on-camera. One man, who wore sunglasses and a visor, said, "I am completely embarrassed that I ever worked at Brooks College or for CEC."
This man, along with two of his former colleagues, Barry Ross and Eric Shannon, used to work at Brooks College. They say there were some dedicated teachers there, but that the administration was more interested in making money than in educating students.
Ross' title was admissions representative. But Shannon says "we were really sales people."
"Selling the dream, basically," says Ross.
"We're selling you that you're gonna have a 95 percent chance that you are gonna have a job paying $35,000 to $40,000 a year by the time they are done in 18 months," says Shannon. "We later found out it's not true at all."
"Yeah, it wasn't true at all," says Ross.
According to an evaluation report from the Western Association of Schools and Colleges, "Only about 38 percent of Brooks students ever finish the program," and the average starting salary for all graduates is "less than $11 dollars per hour."
The admission counselors told 60 Minutes they were expected to enroll three high school graduates a week, regardless of their ability to complete the coursework. And if they didn't meet those quotas, they were out of a job, which is what the man in sunglasses says happened to him. They all say the pressure produced some very aggressive sales tactics.
"In that way, the job was a lot like a used-car lot, because if I couldn't close you, my boss would come in, try to close you," says Shannon.
The enrollment fee was $50. "You need three things," says the man in sunglasses. "You need $50, a pulse, and you've got to be able to sign your name. That's about it."
You have to sign your name to a government loan form. The government-backed student loans are crucial to the entire industry.
In 2003, they made up nearly 60 percent of CEC's revenues. And in order to be eligible for that money, CEC is required to provide students with accurate information about job placement.
Would CEC exist if it weren't for government loans?
"I don't believe that they would be a $1 billion company in 10 years, if it weren't for the federal government loan programs," says Tami Hanson, who was once the national manager in charge of student placement for all of Career Education Corporation's campuses in the United States.
Hanson, who was fired a few months ago, was one of more than 50 current or former employees with whom 60 Minutes spoke at more than a dozen schools. All had variations of the same story.
What was the corporate culture like?
"All about the numbers, all about the numbers," says Hanson. "Getting students enrolled, getting students in the seats. Keeping students in the seats, getting them passed enough to graduate, and then trying to get them any job we could."
But getting students any job they could did not necessarily mean getting them jobs they were trained for. And she says a job placement could mean just about almost anything.
"It may be that, you know, they end up placing them folding T-shirts at the Gap at a fashion, as a fashion grad -- which is fine, but not what they were promised in the beginning," says Hanson.
"And a job they could've gotten without paying $15,000 or $30,000," says Kroft.
Actually, it is more like $30,00 $60,000 and $80,000 depending on the program, says Hanson.
Hanson says the quality of education varies from school to school, and that there are some very good programs and highly motivated students who find successful careers. But she says too many students simply don't have the aptitude or the skills necessary to succeed in class or the workplace.
"They were not prepared, but at the same time, the instructors were really pressured to pass them through that class to keep them in school," says Hanson.
So CEC could keep collecting the government money? "So they could keep the revenue," says Hanson.
CEC has denied these and other allegations in response to various lawsuits, and it says it's made compliance with government regulations and investigating complaints a top priority.
Chairman John Larson wrote 60 Minutes saying, "We'll investigate the situations cited in your report and take appropriate corrective action as violations are identified."
And it did not take long to find a violation. To see how the admissions process works, 60 Minutes Associate Producer Jennifer MacDonald, armed with a hidden camera, went to a number of CEC schools in the New York area.
At the Katharine Gibbs School, she began by asking about graduation rates. She was told that 89 percent graduated.
But that wasn't even close. According to the Department of Education's most recent figures from 2003, this school's graduation rate was 29 percent not 89 percent, a difference of 60 points. Federal regulations require that prospective students be given the official statistics in writing prior to enrollment and the admission representative seemed ready to sign MacDonald up.
When MacDonald wanted to know about a career in fashion, this is what she was told: "These jobs pay a lot of money. You're looking at, if you take this craft and be very serious about it, you can make anywhere from hundreds of thousands to if you go up to be a designer."
But not everything at Career Education Corporation is fashion or business. Its Sanford Brown Institutes prepare students for careers in health care; training ultrasound and cardiovascular technicians; and medical and surgical assistants.
The admission representative told the associate producer that the school was highly selective. So MacDonald did everything she could to disqualify herself for admission to become a medical assistant, a nine-month program that costs almost $13,000 prepares students for entry-level positions.
When lousy grades and prior drug use weren't enough to get her rejected, she tried a different approach. She told them she had a "problem with blood." The representative told her that "98 percent of our students have a problem with blood. The first day of the module, they don't hand you a syringe and say, 'Go for it.'"
The school did require the associate producer to take an admission test. She intentionally flunked it, getting just 7 out of 50 questions correct. But the school allowed her to take another test with different questions. This time, the admission representative said she had doubled her score to 14 out of 50, and that was just good enough to qualify for admission.
Although it was easy to get in, all the counselors told MacDonald she would have to work hard and attend class to complete the course. But Hanson says what CEC is most interested in is tuition.
"They want to say that the student comes first, but I think it becomes obvious to anybody that works in the school, that the student does not come first," says Hanson.
Where does the student come? "The student comes with how many dollar signs are attached to them. And anything after that is secondary," says Hanson.
CEC is not the only publicly traded career-school operator in trouble with the federal government. Last fall, the Department of Education handed out its largest fine ever -- $9.8 million dollars to the Apollo Group and its University of Phoenix for admitting unqualified students to boost enrollment.
And a year ago, federal agents raided the headquarters and 10 campuses of ITT Educational Services, investigating charges of falsified grades and attendance records.
Nick Glakas is president of the Career College Association, a Washington lobbying group that represents 1,100 career colleges in the United States.
"This is not an industrywide problem. And let me address the whole question of being under investigation," says Glakas. "Allegations from a legal standpoint are not facts and are not evidence."
Glakas says career colleges are a passport into the middle class for millions of people, a gateway to the American dream.
"Twenty-five percent of our students are working adults. Fifty percent are minority. Seventy percent are the first in their family to go to college. This is an extraordinary success story," says Glakas.
Rep. Maxine Waters, who represents the poorest district in Los Angeles, isn't so sure. For the past 15 years, she's been the industry's most persistent critic.
"I have seen young person after young person who simply wanted to get trained for a trade, for a job, get ripped off," says Waters.
Why hasn't anything been done? "These private post-secondary schools are very sophisticated in its politics, and they actually have members of Congress who protect them," she says.
Over the past two years, career colleges and lending institutions that benefit from government-backed student loans handed out more than a million dollars in campaign contributions to members of the House Education Committee. Half of that money went to the committee's two ranking members: Chairman John Boehner of Ohio and Buck McKeon of California. Both declined requests for interviews.
As for the sales reps whom 60 Minutes spoke with, Barry Ross has filed a discrimination lawsuit against CEC. Eric Shannon now works in finance, and the young man is the sunglasses is selling cars.
And the Brooks College graduates? They feel betrayed. They were sold the idea that an investment in education would change their lives. This investment did, but not in the way they were promised.
"My mother told me to declare bankruptcy and I'm only 21," says Thurston. "She said it'll go away in 10 years so when I'm 31 I can start my life all over."
"But we are all students that did everything we were supposed to, we gave it our all," says Amanda Harris. "And we're still jobless. You know, like, it doesn't make sense."
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