Bill, Hill, and For Profit Ed

from Raw Story:

...It was recently revealed through Hillary’s emails that during her first year as Secretary of State she insisted that Laureate Education be included in the guest list for an education policy dinner hosted at the U.S. Department of State.

“It’s a for-profit model that should be represented,” she wrote in the August 2009 email, and as a result, a senior vice president at Laureate was added to the guest list. Several months later, former President Bill Clinton became an honorary chancellor of Laureate International Universities, which turned out to be incredibly lucrative. He was paid a cool $16.5 million between 2010 and 2014 for his role with the for-profit college.

Why is this such a big deal?

For-profit colleges have been investigated and shut down in recent years for breaking various state and federal laws. Federal investigations discovered that for-profits have been using deceptive recruiting techniques by inflating job placement numbers while targeting underprivileged youth and veterans. Potential students are encouraged to take out massive amounts of federal student loan debt with the promise of a great post-graduation job, which many never get....

From Keiser U to Grand Canyon U: Seeking Billions More as Non-Profit Schemes

I have often made the point that there is no real difference between for-profit charter schools and non-profit charter schools--there are only different routes to getting the same public money into the same private pockets.  

Now it is clear that for-profit colleges have come to a similar conclusion, and with the Feds all aflutter about for-profit higher ed predators, these thieves are simply altering course into the non-profit schemes.  

As you can see, here, too, the public money ends up in the same private pockets, tax-sheltered. 

A clip from the NYTimes:

After a recent government crackdown on the multibillion-dollar career-training industry, stricter limits on student aid and devastating publicity about students hobbled by debt and useless credentials, some for-profit schools simply shut down.

But a few others have moved to drop out of the for-profit business altogether, in favor of a more traditional approach to running a higher education institution.

And the nonprofit sector, it turns out, can still be quite profitable.

Consider Keiser University in Florida. In 2011, the Keiser family, the school’s founder and owner, sold it to a tiny nonprofit called Everglades College, which it had created.

As president of Everglades, Arthur Keiser earned a salary of nearly $856,000, more than his counterpart at Harvard, according to the college’s 2012 tax return, the most recent publicly available. He is receiving payments and interest on more than $321 million he lent the tax-exempt nonprofit so that it could buy his university.

And he has an ownership interest in properties that the college pays $14.6 million in rent for, as well as a stake in the charter airplane that the college’s managers fly in and the Holiday Inn where its employees stay, the returns show. A family member also has an ownership interest in the computer company the college uses.

Keiser University, which has about 20,000 students spread over 15 campuses, is one of a handful of for-profit colleges that have switched to the nonprofit arena or are considering that move.

The shift means more restrictions on moneymaking ventures and loss of ownership. But nonprofit schools — defined as providing a public benefit — do not have to pay taxes, are eligible for certain state grants and can receive more money from the federal student loan program.

Consumer advocates and legal experts warn that some institutions might be shifting primarily to avoid stepped-up government scrutiny and regulation. Moreover, said Lloyd Mayer, an associate dean and law professor at Notre Dame Law School: “There is a concern that the now-nonprofit colleges may be providing an impermissible private benefit to their former owners. These sorts of arrangements raise yellow flags.” . . .

John Oliver's Takedown of Online Diploma Mills

Must see!!



from the Consumerist:

What would it look like if you condensed all our hundreds of stories about student loans and for-profit colleges into a profanity-filled, hilarious rant that takes a brief detour to discuss Lyndon Johnson’s scrotum? John Oliver answered that question on Sunday night.

Just like it’s recently done with the payday loan industry, Dr. Oz, and net neutrality, Last Week Tonight with John Oliver took one of our favorite topics and made it much funnier than it has any right to be.

You can watch the whole video above, or just read the highlights below:

On the near-inevitability of leaving college shouldered with debt:
“Essentially, student debt is like is like HPV — if you go to college, you’re certainly going to get it, and if you do, it will follow you for the rest of your life.”

On the growing pervasiveness on student loan debt:
“It has surpassed Bob Marley’s greatest hits album as the thing seemingly every college student has.”

On slashed education budgets and skyrocketing tuition:
“In recent years, states have slashed funding for higher education by 23%. Public institutions have responded by raising tuition rates, forcing students to take out ever-larger loans. Why else do you think that colleges have many f*ing a cappella groups? They know they sound stupid, they just can’t afford instruments anymore.”

On a former University of Phoenix executive’s explanation that marketing expenses are often double the amount spent on professors: 
“He’s basically saying, ‘Hey teachers — we’re not saying you don’t matter; we’re just saying that ads about you matter twice as much.'”

On for-profit college recruiters being taught to emotionally manipulate potential students through “pain points“:
“The only people that should be doing that are dominatrixes… or emo bands.”

On the fact that only 27 out of 115 people enrolled in one ITT engineering program graduated and only 13 (11.3%) of them ended up working in the field they studied:
“Everyone else would have genuinely been better off studying engineering at Hogwarts, because at least that way they’d have a f*ing owl to show for it.”

On allegations that recruiters at for-profit educator Ashford signed up veterans suffering from brain injuries, some of whom could not remember which courses they enrolled in:
“I will say this for for-profit colleges: They’ve just given us all an education in the depths of human depravity. We all have a diploma in that now.”

On obvious but effective lobbying by the for-profit college industry:
The Dept. of Education has been ordered to come up with a so-called “gainful employment” rule that requires colleges to prove that a minimum number of a school’s graduates are able to find gainful employment after they graduate.

In response to the initial attempt at creating the rule, lobbyists at the Association of Private Sector Colleges and Universities bombarded regulators with the following form letter, which many people submitted without even filling in the blanks:

“I am a career college student at [INSTITUTION] studying [PROGRAM]. [INSTITUTION] is providing me with the education and training necessary to obtain the job I’ve always wanted as a [CAREER].”

As ridiculous as it is, the efforts of APSCU were successful in scuttling the first go at a gainful employment rule. The Dept. of Education is taking another go at it, and APSCU is still trying to fight against the regulation.

So Oliver has drafted the following form letter, which he’s suggesting that people send to apscu@apscu.orgwithout filling in any of the relevant information:

To Whom It May Concern:
I am [NAME HERE], a human being with [DESCRIBE AT LEAST SOME LEVEL OF SENSE] who is sick of your [SYNONYM FOR BULLSHIT].
Whatever the benefits of for-profit schools, your trade group is protecting the worst actors, and [ADDITIONAL INSULTS]. [IDEAS FOR PLACES TO CRAM THIS LETTER ONCE ROLLED UP]. [PROPOSALS FOR HUMAN WASTE PRODUCTS TO BE EATEN].
Thank you for your time,
[NAME HERE AGAIN]

Oliver’s advice to current college freshmen with student loans:
“You need to stop watching this show right now — you don’t have time for this! Get out there and enjoy the f*ck out of your college experience because you may be paying for it for the rest of your life.

“I’m serious: Drink beer from a funnel, kidnap a mascot, find out if you’re gay or not, and even if you are not, have some gay experiences. Do it now; it doesn’t count.

“Become that weird guy on campus who rides a unicycle from class to class, find out whoever the Winklevoss twins of your school are and steal their idea for a website, and shoot fireworks out of every bodily orifice you can f*ing find. Do it now, please!

“Make sure your college years are the best ones of your life because thanks to the debt that we are saddling you with, they almost certainly will be. Get out there and do it! Go nuts! Go crazy!”

Duncan Caves to the Billionaires of the For-Profit Exploitation Colleges

From TICAS:

Statement on Final Gainful Employment Rule 

Pauline Abernathy, Vice President, The Institute for College Access & Success

Background:  Today the U.S. Department of Education issued a final “gainful employment” rule to enable enforcement of the federal law requiring any post-secondary career education program receiving federal financial aid to “prepare students for gainful employment in a recognized occupation.”  The final regulation applies to all career education programs, whether offered by a public, non-profit or for-profit college.

“The final gainful employment rule is a first step towards preventing federal taxpayer dollars from being wasted on career education programs that leave students with nothing but insurmountable debt. Unfortunately the final rule will allow many programs that over-charge and under-deliver to continue to receive federal student aid. It also fails to address the recommendations of a broad coalition of student, civil rights, consumer, higher education and college access organizations to strengthen the modest draft rule published last July. While the final rule is a step in the right direction, it is substantially weaker than the draft rule and it will take longer to protect students and taxpayers from the worst of the worst programs. 

“Since the draft gainful employment rule was issued, evidence of rampant fraud and abuse in the for-profit career college industry has continued to mount: 11 state attorneys general have launched a joint investigation of the industry; the Justice Department and state attorneys general joined a whistleblower lawsuit against one of the largest publicly traded career college corporations; a Government Accountability Office undercover investigation found 15 out of 15 career colleges engaged in deceptive and misleading practices; and a Senate committee investigation has uncovered company documents encouraging unseemly, high-pressure recruiting tactics.  

“This year alone, taxpayers are expected to underwrite more than $30 billion in federal loans and more than $9 billion in Pell Grants to students attending for-profit career colleges.  However, the evidence is clear that many of these programs are fleecing both taxpayers and students.  The industry enrolls about one in ten college students, but it accounts for one in four federal loan and grant dollars and for nearly half of all defaults on federal student loans. 

“More needs to be done to prevent the waste of taxpayer dollars and protect students, including veterans, from programs that swindle them rather than prepare them to succeed in the workforce.”

An independent, nonprofit organization, the Institute for College Access & Success works to make higher education more available and affordable for people of all backgrounds. For more about our programs and initiatives, including the Project on Student Debt, see http://ticas.org. For more information about support for a strong gainful employment rule, see www.ProtectStudentsandTaxpayers.org. 

For-Profits Draining Federal Education Funds and Leaving Students Broke and Empty-Handed

Tamar Lewin at the NYTimes calls these predatory corporate diploma mills "commercial colleges." How quaint. 

Think Progess has the real story:

The Education Department today released new data on the rate at which higher education students default on their student loans, which showed that students at for-profit colleges — schools like the University of Phoenix or Strayer University — are defaulting at rates far above those at other institutions. In fact, 25 percent of students who attend for profit colleges default within three years. Here’s a chart comparing default rates at different types of schools (the green bar represents defaults at private, for-profit schools).

Here are some more key facts about for-profit colleges:

– Just 11 percent of higher education students in the country attend for-profit schools, yet they account for 26 percent of federal student loans and 44 percent of student loan defaults.

– Many of the schools make up to ninety percent of their revenue from U.S. taxpayers, through the Pell Grants, Stafford Loans, and other federal assistance used by their students. 91.5 percent of Kaplan’s revenue comes from the government, along with 88 percent revenue at the University of Phoenix.

– CEO’s of for-profit colleges receive up to 26 times the amount of pay that the heads of traditional universities do.

Strayer CEO Robert Silberman was paid $41.9 million in 2009. As Bloomberg News noted, “Silberman’s annual compensation would have ranked him eighth on Equilar’s list of the highest-paid executives at the largest 1,000 companies.”

The schools also engage in aggressive recruiting and marketing tactics, promising students quick degrees and good jobs, when the result is more often a rip-off, resulting in “crushing debt and bleak job prospects.” A new report from the National Consumer Law Center said that the for-profits’ in-house loan programs are, for all intents and purposes, predatory.

To address these problems, the Obama administration is attempting to implement tougher regulations — dealing with what’s known as “gainful employment” — which would cause for-profit programs, as well as some programs at non-profit and state schools, to lose their access to public money if their graduates fail to meet a certain debt-to-income ratio or have high rates of student loan default. The regulatory drive has caused the for-profits to buy up a slew of lobbyists and make millions in donations to congressional campaigns and political action committees.

Currently, for-profit schools are only allowed to make 90 percent of their revenue from the federal government. But the schools evidently feel this is not enough, as they’re pushing the government (aided by House Republicans) to eliminate a rule capping how much of their revenue can come from federal largesse, providing them with what is essentially a bailout, as they’re likely to violate the rule this year unless an exemption is made.

For more information, read today’s Progress Report, “For-Profits, Not Students.” Cross-posted on The Wonk Room.

For-Profit or "Investor Funded," It's the Same Diploma Mills

While the Washington Post is on life support financially, and even more so now that the for-profit diploma mill, Kaplan U. has been implicated in the loan repayment scandal, WaPo has the audacity to offer Robert Silberman, the dissembling CEO of Strayer University, a big op-ed space to make the case for the college profiteer cause.  "For-profit" has become such a toxic label that Silberman, whose own diploma mill is in the low 20s in repayment rates of federally-insured studetnt loans, has come up with a substitute for "for-profit."  How about "investor funded educational institutions?"  Does that make these crooked scammers sound any more respectable, even though their exploitation of the poor remains their ticket to fabulous wealth while offering worthless degrees?  Didn't think so.  A taste from WaPo:

. . . .Taxpaying, investor-funded universities can provide underserved students with high-quality education and prepare them for personal and professional success. Recently, some policymakers and commentators have questioned the value of investor-funded educational institutions. They claim that such institutions are systemically incapable of meeting their academic missions. In fact, regionally accredited, investor-funded universities that offer bachelor's and master's degrees are already a critical part of our nation's higher education fabric. . . .

Privatized "College" for the Poor at Public Expense: How Outrageous Can It Get

The execs of the for-profit college scam are scurrying around like fat cockroaches as the light bulb in Washington finally is turned on the feeding frenzy that W. unleashed during his reign of corporate terror.  Though these diploma mills enroll only 10 percent of the student population, they drain off 25 percent of the Pell Grant dollars from the federal treasury, most of which are never repaid by poor students without chance in hell of getting a decent job with the worthless degrees that the for-profit charlatans offer.  From the LA Times:

Overall, the repayment rates at these for-profit schools was only 36% in fiscal 2009, according to an analysis of the data conducted by the Institute for College Access and Success, a student-advocacy group.

By comparison, the repayment rate at private nonprofit schools was 56%, the group found. At public state colleges and universities, the rate was 54%.

Losing federal aid would effectively put many programs out of business: Some for-profit colleges rely on such funding for nearly 90% of their revenue — the maximum percentage allowed by the federal government.

Although just 10% of college students attend for-profit schools, the schools collect nearly 25% of the $24 billion the government allocates each year to fund Pell grants and Stafford loans.

And here are some other interesting facts regarding the exploitation of the poor from a report (pdf) in May 2010 by the Project on Student Debt:

• Almost one in four (24%) of all 2008 graduates from for-profit four-year colleges owed at least $40,000 in student loans, compared to just 6% of graduates from public four-year colleges and 15% from private nonprofit four-year colleges.

• Pell Grant recipients who graduate from four-year colleges are more likely to have high debt if they attended a for-profit college. Among graduating seniors, 23% of Pell Grant recipients from for-profit colleges carried at least $40,000 in student loans, compared to 14% at all other colleges.  

• The proportion of for-profit graduates with high debt is similar for all racial and ethnic groups (21-24%).

• Students who attend for-profit four-year colleges are more than twice as likely to default on their federal student loans as those from other four-year colleges. . . .

The 15 for 15 Corrupt For Profits Named

From Inside Higher Ed:

Deceptive or Completely Questionable' Practices
Presenting the findings of the GAO investigation was Gregory D. Kutz, the office’s managing director of forensic audits and special investigations at the Government Accountability Office. In testimony made more powerful by the brief undercover video clips that punctuated it, Kutz detailed “deceptive or completely questionable” practices at all 15 institutions.

The colleges the GAO visited were not a totally random sample, Kutz said, but they were not institutions where his office or the Education Department were already aware of fraud. “It gives you an indication that this is much more widespread than a few bad actors.”

Colleges Visited by GAO	Location
University of Phoenix	Arizona
Everest College	Arizona
Westech College	California
Kaplan College	California
Potomac College	District of Columbia
Bennett College	District of Columbia
Medvance Institute	Florida
Kaplan College	Florida
College of Office Tech	Illinois
Argosy University	Illinois
University of Phoenix	Pennsylvania
Anthem Institute	Pennsylvania
Westwood College	Texas
Everest College	Texas
ATI Career Training	Texas

Though Kutz’s written testimony didn’t identify the campuses the GAO examined, he did, at Harkin’s request, release a list of the institutions. They included campuses of the University of Phoenix in Arizona and Pennsylvania, Kaplan College in California and Florida, Everest College in Arizona and Texas, as well as privately held institutions including ATI Career Training and Medvance Institute.

Manny Rivera, a spokesman for Apollo Group, which owns the University of Phoenix, said the company has “strict policies in place to protect students during the enrollment process and throughout their tenure with the university, and when we discover any violation of this policy, we take immediate and decisive disciplinary action up to, and including, termination of the employees involved."

Jacquelyn P. Muller, vice president of public relations at Education Management Corporation, which owns Argosy University in Chicago -- one of the institutions visited -- said that “every employee within our organization is held accountable for upholding the highest moral, ethical, and legal standards at all times.”

Kutz said that though corporate leaders may try to dismiss his investigation’s findings as problems with individual employees, “I expect anybody who would have walked in... and that was trained a certain way in marketing was going to the same script.” Institutions may say “‘that was a rogue employee,’ but I suspect in some of these cases that is absolutely not true."

Sen. Johnny Isakson (R-Ga.), reinforcing what has become Republicans’ standard way of addressing problems uncovered at for-profit colleges, said: “I know we’ve got people doing bad things, but I know we’ve got a lot of people doing it right and they’re going to be under a cloud unless we begin to separate the wheat from the chaff.”

Joshua Pruyn, a former recruiter for a Westwood College, who testified at the hearing, said he didn’t think the kind of dishonest behavior that he saw and was encouraged to emulate while working at a Colorado campus resulted from a few “rogue” employees violating his institution’s code of ethics, but rather a pattern of behavior encouraged by corporate leaders.

Harkin, too, said he believed the encouragement to aggressively and dishonestly pursue students came from higher up. Showing a recruitment training PowerPoint slide from the University of Phoenix with the header “Creating Urgency: Getting Them to Apply NOW."

Harkin said he thought inducements to recruit aggressively were coming from company executives. “That doesn’t come from some employee,” he said. “That comes from the top.” . . . .

For Profit Diploma Mills Draining Federal Student Loan Kitty

Some of the for-profit bottom feeders who prey on the poor and even the homeless to recruit bodies for their worthless degrees have been outed.  We must wonder what it will take to cut these money sinks off from the federal student loans that are making for profit college CEOs deliriously wealthy.

From the Chronicle of Higher Ed:

These 20 institutions could be found in violation of a new federal rule on student-loan defaults if it took full effect today instead of in 2014, as planned. The colleges could escape risk by lowering their default rates before then. Colleges in violation can lose eligibility for federal student aid. For-profit institutions appear disproportionately affected by the new rule. Only three colleges named below are not for-profit: Benedict, Jarvis Christian, and Texas Colleges. An institution would violate the rule if for three consecutive years, 30 percent or more of its borrowers defaulted within three years of their scheduled start of repayment, or if the institution's default rate exceeded 40 percent in the most recent three-year period.

Institution*	Location	Number of borrowers starting repayment in 2007	Number of borrowers who defaulted within three years	Default rate, 2007	Default rate, 2006	Default rate, 2005
Three years with default rate of 30 percent or more:
Arizona Automotive Institute	Phoenix, Ariz.	552	214	39%	36%	33%
Aviation Institute of Maintenance	Kansas City, Mo.	124	46	37%	47%	31%
Benedict College	Columbia, S.C.	1,103	374	34%	33%	34%
Camelot College	Baton Rouge, La.	249	84	34%	51%	35%
Centura College-Richmond	Richmond, Va.	345	112	32%	33%	33%
College of Office Technology	Chicago, Ill.	644	305	47%	39%	38%
Everest College at San Bernardino	San Bernardino, Calif.	765	284	37%	33%	32%
Everest Institute at Rochester	Rochester, N.Y.	1,638	610	37%	35%	34%
Huntington Junior College	Huntington, W.V.	483	199	41%	38%	33%
Jarvis Christian College	Hawkins, Tex.	224	89	40%	40%	37%
Tesst College of Technology	Baltimore, Md.	1,098	462	42%	42%	34%
Texas College	Tyler, Tex.	365	149	41%	41%	36%
Westwood College-DuPage	Woodridge, Ill.	885	269	30%	31%	34%
WyoTech at Long Beach	Long Beach, Calif.	2,224	719	32%	35%	31%
Default rate of more than 40 percent in most recent year:
Advanced College	South Gate, Calif.	92	37	40%
Angley College	Deland, Fla.	115	51	44%
Centura Institute	Orlando, Fla.	57	23	40%
College America at Flagstaff	Flagstaff, Ariz.	240	111	46%
Lamson College	Tempe, Ariz.	330	145	44%
Lincoln Technical Institute	Philadelphia, Pa.	544	230	42%
Additional colleges have recorded high rates for two consecutive years and so may be at risk of violating the rule if they cannot lower their default rates.
		Degree-granting institutions		All postsecondary institutions
Number of institutions with a default rate of 30% or more in 2007 and 2006		41		100
Number that are for-profit		34		93
* Degree-granting institutions only
Note: The federal rule allows for appeals on various grounds, allowing some colleges with high rates to avoid losing eligibility for federal dollars. Colleges with fewer than 30 borrowers in one year are subject to separate provisions under the rule and so are not included in this analysis.
Source: U.S. Education Department data
Chronicle analysis by Jeffrey Brainard

The College Caste System: Feeding the Corporate Welfare Colleges to Miseducate the Poor and the Homeless

Yielding to pressure from the for-profit corporate college lobbyists, earlier this year the Congress cut funding for the expansion of community colleges from $12 billion to $2 billion.  Meanwhile, the President reads the script handed him by the Chamber of Commerce to guarantee that college for the lower caste is turned over to corporate exploitation: 

Every American will need to get more than a high school diploma, and by 2020, America will once again have the highest proportion of college graduates in the world.

So with money choked off from the community college expansion and with broke states starving out the public colleges and universities, where to turn to make the President's pledge come true?


That's right, the poor can turn to the schemers and scammers of the for-profit online diploma mills like Phoenix, Kaplan, Capella, Grand Canyon U., and Drake, any of which may be found on any given day down at the homeless shelters and soup kitchens recruiting new students.  For if you can sign your name, you can get fixed up with a federal loan that goes into the corporate pockets of these bloodsuckers, while leaving students even more destitute, with debt they can never repay, no skills, and a useless piece of paper.  All on the public dime, and all protected by the U. S. Department of Education, which just offered up new guidelines for the corporate colleges that are being cheered by the for-profit bottom feeders.  On June 16, the Wall Street Journal headline was "For Profit College Investors Cheer Education Dept Proposals":

By Melissa Korn Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--For-profit college investors applauded the U.S. Department of Education's announcement Wednesday of a number of proposed reforms covering higher education, though analysts warn stocks could see pressure down the line as one issue remains unresolved.

The government-proposed reforms cover 13 major shortcomings in higher education, but the department said it will hold its recommendations on the 14th--a measure that would penalize schools for graduating students with high debt loads--until later this summer. Investors were excited to see the government take a more studied approach after industry lobbyists warned the proposal could "crush" the for-profit school sector.

Shares of DeVry Inc. (DV), a school some analysts say would be hit hard by the delayed proposal, were recently trading up 2% to $57.48, while Apollo Group Inc. (APOL) gained 2% to $49.27. American Public Education Inc. (APEI) was up 1.2% to $46.81 and Capella Education Co. (CPLA) climbed 1.2% to $86.62.

The delayed proposal, intended to judge schools on how well they prepare students for gainful employment in a recognized occupation, was expected to force many programs to cut tuition or even shut down entirely. The Education Department has recommended that programs disclose job placement and graduation rates, as well as student debt loads, by June 2013, but said it will continue to study possible metrics by which to judge school success and will release another proposal on that subject later this summer.

"Some key issues around gainful employment are complicated and we want to get it right so we will be coming back with that shortly," Education Secretary Arne Duncan said in a statement. . . .

That is to say, we don't want to offend any of the oligarchs until after the November election, and we don't want to lose any youth vote, either, by showing our hand.  Here is a thoughtful piece on the new proposed regulations that are open to public comment until August.  A clip:

The U.S. Department of Education is proposing new rules to oversee the growing field of for-profit higher education, but it kicked the can down the road on the most controversial idea: making institutions prove that their graduates find “gainful employment.”

Doing that would require some complicated and uncomfortable math for the schools: calculating “debt-to-income loads,” which is the ratio between how much a graduate owes in student loans and how much he or she earns. If the salaries are insufficient to pay off the debts – a common complaint among graduates of for-profits – the institutions would lose federal education funding and likely close.

With billions of dollars at stake, for-profit colleges lobbied heavily against a plan floated a few months ago by the Education Department to link gainful employment to an 8 percent debt-to-income load, which the industry said would put many programs out of business. The lobbying appears to have worked to shelve that proposal, at least for now: on Tuesday, the department announced new rules covering 13 of 14 areas of for-profit higher education reform, leaving the gainful employment proposal for “later in the summer.” . . . .

The Next Too Big To Fail: For Profit Colleges

With a default rate of nearly 50 percent and with graduates holding a lot of meaningless and useless paper degrees and with the amount of for-profit student loan debt equal to the total amount of credit card indebtedness in all of America ($750 billion), we must wonder what is keeping Arne Duncan and the Dems from doing something to rein in these corporate welfare diploma mills whose administrators are getting deliriously wealthy from taxpayer-supported student loans.

Could the hesitation to stop the bilking and fraud have something to do with an Obama promise to return the U.S. to its #1 status in the number of college degrees? With Wall Street buying Congressional votes to halt the expansion of public colleges and universities, it seems that the for-profit phony-baloney colleges will have to play a vital role if the President is not to be embarrassed by making another promise he can't keep.

Besides, who are these profiteers at Argosy and Phoenix and Corinthian hurting, anyway? Certainly no one who matters, since they prey on the poor and the disenfranchised who believe that there is someone who is actually offering them real educations and real future jobs. More liar loans and no questions asked by these leeches who spend more on marketing than they do on instruction.

And so this is to be the present and future of the higher education caste system in America, where those who are privileged get real educations in real brick and mortar institutions--and those who are not privileged get online or strip mall after-hours "instruction" by over-extended and worn out adjuncts who, themselves, are just trying to pay the rent? And the bubble expands and expands.

Meanwhile, Arne Duncan is flying high, it seems, and far above this kind of messy and ugly business. And if you thought the witless Margaret Spellings was deluded with her 99.44% purity remarks about NCLB, Arne has done her one better by insisting for himself universal acclaim and no public opposition. From the NY Times:

A new survey by the Pew Research Center found distrust of government at its highest level in 30 years. Of all federal agencies, the department of education’s approval rating had fallen most sharply, to 40 percent from 61 percent in 1998. In fact, the department got the lowest rating of any federal agency, including the Internal Revenue Service. Mr. Duncan’s aides said the drop could reflect dissatisfaction with No Child Left Behind.

Mr. Duncan says he encounters no public opposition.

“Zero,” he said. “And as hard as we’re pushing everybody else to change, we’re pushing the department to change even more. There’s just an outpouring of support for the common-sense changes and the unprecedented investments we’re making.”

The whole segment of Frontline can be viewed here online.

Don't Miss College, Inc. Tonight, May 4, on Frontline

Or watch later online.


Press Release:

Higher education is a $400 billion industry fueled by taxpayer money. One of the fastest-growing--and most controversial--sectors of the industry is the for-profit colleges and universities. Unlike traditional colleges that raise money from wealthy alumni and other donors, many for-profit schools sell shares to investors on Wall Street. But what are students getting out of the deal? Critics say a worthless degree and a mountain of debt. Proponents insist they're innovators, widening access to education. FRONTLINE follows the money to uncover how for-profit universities are transforming the way we think about college in America.

For-Profit Diploma Mills Drain Away Cash and Hope

Sunday's New York Times had a revealing piece on the leeches and bottom feeders in the for-profit college business who prey on the poorest and most vulnerable. By making big promises and delivering nothing of value in return, these diploma mills drain students' Pell Grant funds, and students are left in debt with no job prospects. A clip:

. . . .The stakes are enormous: For-profit schools have long derived the bulk of their revenue from federal loans and grants, and the percentages have been climbing sharply.

The Career Education Corporation, a publicly traded global giant, last year reported revenue of $1.84 billion. Roughly 80 percent came from federal loans and grants, according to BMO Capital Markets, a research and trading firm. That was up from 63 percent in 2007.

The Apollo Group — which owns the for-profit University of Phoenix — derived 86 percent of its revenue from federal student aid last fiscal year, according to BMO. Two years earlier, it was 69 percent.

For-profit schools have proved adept at capturing Pell grants, which are a centerpiece of the Obama administration’s efforts to make higher education more affordable. The administration increased financing for Pell grants by $17 billion for 2009 and 2010 as part of its $787 billion stimulus package.

Two years ago, students at for-profit trade schools received $3.2 billion in Pell grants, according to the Department of Education, less than went to students at two-year public institutions. By the 2011-12 school year, the administration now estimates, students at for-profit schools should receive more than $10 billion in Pell grants, more than their public counterparts. (Those anticipated increases may shrink, depending on the outcome of wrangling in Congress over health care and student lending.)

Enrollment at for-profit trade schools expanded about 20 percent a year the last two years, more than double the pace from 2001-7, according to the Career College Association.. . . .

For Profit Diploma Mills Collect Billions: Students and Taxpayers Left with Piece of Coal

From Pro Publica:

. . . .A recent investigation by the Government Accountability Office found instances of for-profit schools’ engaging in outright fraud to sign up unqualified students [3] (PDF) and warned that "the government cannot be assured that its student aid funds are only provided to students who have an ability to benefit from higher education.’’

Earlier this week, the department made public the default rates for students who graduated three years ago [4], reporting that students at the larger for-profits were defaulting at a rate of around 20 percent. Those are similar to levels, last seen during the early 1990s, that prompted the last major changes in how government regulates the industry.

Previously, the department published data only for defaults in the two-year window after students graduated. In general, those were relatively low. The numbers released this week show that by year three, the rates rise dramatically, as this chart shows. [2]

The three-year rates for some schools are high enough that, if those rates continued for another couple of years, those schools would no longer be permitted to write federal student loans [5] and grants, which cost the federal government $117 billion [6] (PDF), according to the Department of Education. The stimulus package pumped another $15 billion into education grants. The largest recipients [7] of both programs are for-profit schools. . . .

For Profit Diploma Mills Draining Fed Ed Dollars and Leaving Students Broke

The corporate felons at the Apollo Group were convicted in early 2008 of fraudulently misleading investors. From the NYTimes, 01/17/08:

PHOENIX (AP) — The Apollo Group Inc., the company that owns the University of Phoenix, fraudulently misled investors in 2004 about student recruitment policies, a federal jury decided Wednesday. The panel ordered the company to pay shareholders about $280 million.

Jurors said Apollo officials “knowingly and recklessly” made false statements in a news release, a filing with the Securities and Exchange Commission and four conference calls with market analysts. By doing so, jurors said, Apollo violated federal securities laws. . . .

Since that time, the Apollonoid lawyers have been trying to cut a deal to lower the settlement to somewhere between 45 and 200 million. UPhoenix has nothing really to worry about, however, even if the entire amount has to be paid, for $280 million would be just over a third of what UP hustles in one year from Pell Grant dollars alone. From a story today by AP's Justin Pope on the corporate college corruption that Arne Duncan has enabled by allowing federal grants and loans to be wasted in the virtual learning corporations that are devoid of any discernible virtue:

Phoenix alone had more than 230,000 Pell recipients last year (and received $657 million Pell dollars, roughly its parent company's yearly profit). Its campuses educate nearly four times more low-income students than the entire Big 10, and more than 30 times the Ivy League, the AP found. Unlike proprietary schools, those traditional colleges enjoy tax-free status for supposedly providing a public service, notes Harris Miller, president and CEO of the Career College Association.

And $657 million is just the Pell Grant dough. There are hundreds of millions, too, in low interest federal student loans that go pay millions to UP's CEOs and to pay dozens of dollars at least to adjunct professors, many of whom bought their own degrees at these same pedagogical establishments.

Yes, business is good at Apollo, with a "buy" rating (that was likely bought) on its stock. Bought or not, Apollo is spending almost a billion dollars every year on sales and promotion. That's $1,000,000,000. The corporates control 10 percent of the higher education market. Hey, you can't keep a good casino capitalist down, especially when your lobbyists have made sure there is nothing virtual about the cold hard cash that comes pouring forth from the Federal Treasury, money that was intended to help those who need help to get a college education.

But you can keep keep down Apollo's clientele, those adults and teens left behind, those who comprise the poorest and most desperate college student population, the ones who can't go to the leafy three-dimensional campuses, the real campuses with libraries and labs, football teams and food courts. Meanwhile, the corporate ed reformers in charge of California's public university system are putting real colleges further out of reach with a 30-40 percent tuition increase planned for next year--assuming the students and workers don't burn the whole thing down first. A very effective corporate college feeder strategy that will, no doubt, attract more uninformed and gullible students to the Kaplans and the UPs, students who will never challenge the crap ed they receive. After all, that's what they got in the 12 years prior, right.

What's the graduation rate from these online corporate diploma mills? Try 38%. How much do students owe after their miseducative experiences? Almost 9 percent more than they would if they were enrolled in PRIVATE nonprofit four-year colleges:

Students who don't graduate will be hard pressed to repay their debts. On average, for-profit schools cost five and a half times the price of community colleges. Virtually all students must borrow some money, and even among graduates of for-profit four-year programs, the average borrower ends up owing $33,000, according to the latest government data analyzed by Mark Kantrowitz of the Web site finaid.org. That's about $5,000 higher than even private nonprofit four-year colleges.

Yes, the Federal gravy train just keeps on rolling for the capitalist frauds, crooks, and profiteers who act as if they own the Republic. Here is another clip big clip from Pope's piece:

RALEIGH, N.C. – Students aren't the only ones benefiting from the billions of new dollars Washington is spending on college aid for the poor.

An Associated Press analysis shows surging proportions of both low-income students and the recently boosted government money that follows them are ending up at for-profit schools, from local career colleges to giant publicly traded chains such as the University of Phoenix, Kaplan and Devry.

Last year, the five institutions that received the most federal Pell Grant dollars were all for-profit colleges, collecting over $1 billion among them. That was two and a half times what those schools hauled in just two years prior, the AP found, analyzing Department of Education data on disbursements from the Pell program, Washington's main form of college aid to the poor.

This year, the trend is accelerating: In the first quarter after the maximum Pell Grant was increased last July 1, Washington paid out 45 percent more through the program than during the same period a year ago, the AP found. But the amount of dollars heading to for-profit, or "proprietary," schools is up even more — about 67 percent.

For-profit colleges say the country has little choice but to accept their help to achieve President Obama's goal of getting every American to enroll in some form of education beyond high school. The for-profit schools have space while community colleges are bursting at the seams. Besides, their convenience and career-focused curriculum are clearly winning customers, who are free to use their aid where they choose.

But critics say the increased federal aid has unleashed a new gold rush. They complain the industry has too many incentives simply to enroll students and tap the spigot from Washington — and not enough to make sure students succeed.

The industry is "an aggressive sales operation that has a voracious appetite for recruiting the poorest students," said Barmak Nassirian, associate executive director of AACRAO, a group representing admissions officers and registrars at traditional colleges. "The victims here are the students themselves and the taxpayers, who have to pick up the tab."

Regardless of how AP's findings are interpreted, they underscore the extent to which the United States has ramped up its support for low-income college students in recent years, but increasingly outsourced the job to the private sector.

• Last year, Washington paid out a record $18.3 billion in Pell Grants, which typically go to families earning under $40,000. Proprietary colleges collected about $4.3 billion of that, or about 24 percent — roughly double the proportion a decade ago.

• In the first quarter of the current academic year, for-profit colleges collected $1.65 billion, or 67 percent more than in the same period a year ago. On July 1, the government made more students eligible for Pell grants and increased the maximum award by $600 to $5,350.

• For-profits are also grabbing a growing share of loans subsidized by the government to help low-income students. They collected about $7 billion in subsidized Stafford loans in 2008-2009, up from $4.7 billion two years before. Taxpayers subsidize the interest rate and take the hit when students default. Nearly one-quarter of students at for-profit schools default within four years, more that double the rate of other schools.

Overall, the sector enrolled about 2.7 million students in 2007-2008, the latest year with complete federal data available. That was only about 10 percent of total enrollment in higher education, but it's about 2 million more than a decade before.

The numbers are even more striking for low-income students: The number of Pell recipients enrolled in for-profit schools is 50 percent higher than two years ago. . . .