Tuesday, July 29, 2014

Governor Walker praises predatory for profit college

In 2010, Wisconsin Governor Scott Walker slashed technical college funding by 30%, reducing state funding to levels last seen in the 1980's. Walker also cut the University of Wisconsin system's funding by $250 million. 

These cuts lead to increased tuition and reduced sections and services to students. 
Yesterday, Walker toured and praised a predatory for-profit college, ITT Tech, that is currently under investigation for fraud by the federal Consumer Financial Protection Bureau. 
MATC instructors are well aware of ITT because so many of our students are former ITT students who are saddled with huge debts and worthless ITT Tech credits. Joriah Siemann was one such student. When Milwaukee Magazine interviewed Joriah in 2012, the 39-year-old still owed $20,000 to ITT Tech in Greenfield, the very college Walker praised. 
 Joriah earned an associate degree from ITT in computer networking in 2004 after learning about the program online. After an entry exam, Siemann told Milwaukee Magazine, he felt pressured by his admissions representative to enroll on the spot. He acquiesced, not realizing he’d also taken out $35,000 in loans to pay for his tuition. To top it off, he says the school’s job-placement efforts were subpar. “They didn’t help me find a job at all,” Siemann says. “I’m kicking myself for going to ITT.”  

The United States Senate report (see below) on for profit colleges suggests that ITT’s priorities are not educating or helping place students in jobs. It found that nationwide in 2010, ITT employed one recruiter for every 34 students, but one career counselor for every 204 and one student services employee for every 807.  

Siemann was working two jobs – as a systems administrator and a restaurant server – and was enrolled at MATC while paying off his ITT degree when he was interviewed by Milwaukee Magazine in 2012.

Walker claims that ITT Tech in Greenfield has a good record. But the experience of students like Joriah contradict the Governor's talking points.

Saul Newton, an Afghanistan army veteran and a UW Waukesha student wrote the following op ed in the Milwaukee Journal Sentinel in response to Walker's visit to ITT:

 Governor Scott Walker expressed his support for a for-profit college under investigation in multiple states and by the federal Consumer Financial Protection Bureau, claiming their track record has been positive.

The Governor’s comments came during an official tour at the ITT Technical Institute Center for Career Development in Greenfield on Monday afternoon. Walker toured the facility and spoke with students and faculty. 

“The track record they’ve had in the Milwaukee area, at least, has been a positive one,” said Walker.

ITT Technical Institute is a for-profit technical college operating 144 campuses in 35 states. According to the Consumer Financial Protection Bureau, ITT’s tuition costs are among the highest in the nation. In Wisconsin, an Associate’s degree program can cost up to $44,000, and a Bachelor’s degree program can cost over $89,000.

In 2012 the Educational Approval Board, the state agency charged with overseeing for-profit and independent colleges, foundthat 51% of ITT students in Wisconsin drop out before completion of their program. Only two other institutions had a higher drop out rate. One Wisconsin based ITT program saw 93% of students drop out. 

ITT Tech relies heavily on veterans to pad its revenues. According a scathing report by the U.S. Senate Committee on Health, Education, Labor and Pensions, Sen. Tom Harken (D-IA) found that ITT focused specifically on recruiting military veterans and service members. 

ITT Technical Institute collected $178 million in veterans benefits from 2009-2011. ITT was the second highest recipient of revenue from military educational benefits among institutions the HELP Committee examined. The report alleged highly deceptive and fraudulent recruiting practices toward veterans and active duty military members.

When asked about ITT’s recruiting practices toward the military, Governor Walker defended the college.

“That may be the experience they’ve had in other places, but the experience we’ve seen with folks working in this state has been pretty positive. We actually have a stronger GI Bill in the state of Wisconsin than they do nationally.”

In February, the CFPB filed a lawsuit in federal court alleging ITT Technical Institute pushed students into predatory high-interest student loans and mislead them about job prospects and salaries upon graduation.

"ITT marketed itself as improving consumers' lives but it was really just improving its bottom line," said CFPB Director Richard Corday. "We believe ITT used high-pressure tactics to push many consumers into expensive loans destined to default.”

ITT is also under investigation by thirteen state Attorneys General for predatory and fraudulent recruiting practices. 

An estimated 26,000 students attend for-profit colleges in Wisconsin, paying $155 million every year in tuition to mostly out of state companies.

In 2010, following the unexpected closure of several campuses in the Milwaukee area, a state committee was established to set performance standards at for-profit schools like ITT. After meeting just one time, Walker replaced three members of the seven members serving on the committee. It was dissolved shortly thereafter.

The for-profit college industry has been a significant factor in the explosion of student loan debt across the country. ITT collected $586 million in federal student loans. The HELP Committee report concluded more than 1 in 5 students who attended a for-profit college but did not graduate defaulted on their student loans within three years, more than three times the rate of student attending other types of institutions. 

Student loan debt is a serious drag on our state's economy. Research from One Wisconsin Institute, a liberal advocacy organization in Madison, showed that those with a student loan are twice as likely to rent or live with others than owning their own home and they are twice as likely to own a used, rather than new car. New cars are the driving force for the American auto industry. One Wisconsin's research shows we lose over $200 million every year in Wisconsin in new car purchasing power directly attributable to student loan debt.
For-profit colleges like ITT Technical Institute continue to operate in Wisconsin with no standards for student achievement. Given the Governor’s comments, that trend is likely to continue.

Thursday, July 17, 2014

R.I.P. James Shay Stear Swinford

Shay was a 2nd year culinary arts student at MATC, a victim of the mindless gun violence that is too prevalent in our country.  He was shot on July 8th. He died on July 12, 2014.

His death like that of any young person is a parent’s worst nightmare. 

It is reminder that for many of our students, like Shay, we are their only hope for a better future. They place their trust, fears and dreams in our hands. We and they don’t always succeed. Tragically, Shay did not. But we and they do more often than not. And all of us need to redouble our efforts in Shay’s name to help Milwaukee’s young people fulfill their potential and dreams.  
Shay is the son of Amy Stear who helped lead the successful paid sick days campaign that was eventually vetoed. 

Here is what she wrote about her son’s death:

On Tuesday, July 8th my son Shay was shot in Milwaukee.  He struggled to survive while being cared for at Froedtert Hospital for three days but finally succumbed to a massive stroke on Friday.  His father and I accepted we had to remove life support on Saturday and let him go. It was the hardest thing I have ever done in my life and I will live the rest of my life unafraid of anything because nothing can ever hurt me beyond what I can bear after experiencing this.

Shay wanted what most kids his age wanted - to have a path to a better future.  He was starting his second year at MATC in the culinary arts program.  He had wanted to be a chef since he was in grade school so this program fit his interests, his creativity and his desire to find work doing something he enjoyed.  He took school seriously and regularly called me to go over his assignments, he wanted to do well.

But he also wanted to have fun, hang out with his friends and enjoy being young.  We all know that feeling, we've all been there.  Sadly, in his case in Milwaukee that came with a real risk that was ultimately realized last Tuesday night.

I have lost my only son.  I will never get over this.  And I don't want anyone else to ever face this but I know that's not how the world works.  So we change the world.  That is on all of us, whatever way we can.

I have been asked about memorials for Shay and my suggestion is that anyone who is interested in honoring Shay and reaching other kids like him make donations of either volunteer time or financial support to Campaign Against Violence Milwaukee or Urban Underground.  Both organizations are committed to kids like Shay and their contact information can be found online.  Please remember my child and please think of all the other children who need to find a way into a peaceful, happy life.

Here is Shea's obituary that appeared in the Milwaukee Journal Sentinel.

Friday, June 27, 2014

Twelve Senators say Corinthian should stop enrolling students

A dozen U.S. senators, all Democrats, are pushing Corinthian Colleges Inc. to stop accepting new students in a letter to the Department of Education.
Corinthian owns the Everest College, Heald College and WyoTech schools and has about 75,000 students. Its Milwaukee campus closed after less than two years of opening with drop out rates of more than 50% and job placement rates of less than 6%.
The Education Department this week worked out a deal with Corinthian that gives it $16 million in federal student aid funds to keep the company running as it figures out a plan to sell or close many schools over the next six months. Corinthian, which has more than 100 campuses, said it will look for new owners for most of its schools and hopes to have sales agreements in place within about six months.
Santa Ana, California-based Corinthian had warned last week that it could go out of business after U.S. regulators limited its access to federal funds. The government is scrutinizing the company over allegations that it altered grades, student attendance records and falsified job placement data used in ads.
In the letter addressed to Education Department head Arne Duncan Thursday, the 12 senators said students need to be protected from the company. Iowa Senator Tom Harkin, who is also the chairman of the Senate Health, Education, Labor, and Pensions Committee, was one of the politicians who signed the letter.
"Corinthian has shown itself to be one of the worst actors in the for-profit college industry," the letter said.
Representatives from Corinthian and the Education Department did not immediately respond to a request for comment.
The letter also wants the Education Department to make sure the company explains to students its plans and to stop any for-profit education company that's under investigation from purchasing from or taking on students from Corinthian.

Tuesday, June 24, 2014

Corinthian reaches deal with Feds to remain open

Moving to head off a cash shortfall, the consequence of the Corinthian College's failure to comply with federal reporting regulations, the controversial for-profit college announced on Monday that it had reached an agreement with the federal Department of Education that would allow it to continue operating, at least temporarily.

 Under the memorandum of understanding, Corinthian, a publicly traded company based in Santa Ana, Calif., will immediately receive $16 million in federal student aid funds — the amount it said it needed to keep operating through Friday. By July 1, the company and the government plan to agree on a transitional operating plan, specifying which schools will be sold and which will be phased out.

 The company operates 107 campuses of the Everest, Heald and WyoTech institutions, as well as online programs. It's controversial Milwaukee campus closed slightly more than a year ago, less than two years after it had opened after its job placement rates of less than 6% and drop out rates of more than 50% were revealed. 

Even with the agreement, Corinthian’s future remains shaky at best. How this will play out is uncharted territory, said Terry Hartle, senior vice president of the American Council on Education. “This avoids a precipitous closure, but it’s not a long-term or even medium-term solution,” Mr. Hartle said. “It’s a short-term agreement to see what kind of arrangement they can reach to avoid the biggest closure we have ever had, throwing 72,000 students into the street.”

 In the government’s statement, Under Secretary of Education Ted Mitchell said, “We will continue to closely monitor the teach-out or sale of Corinthian’s campuses to ensure that students are able to finish their education without interruption and that employees experience minimal disruption to their lives.”

 Corinthian has been battered by declining enrollments and a rush of federal and state investigations and lawsuits accusing it of preying on low-income students, falsifying job placement rates and leaving too many students with crippling debt and no useful job credentials. Like other for-profit higher education companies,

Corinthian receives most of its revenues from federal student aid programs — about $1.4 billion a year, the government says, from federal student loans and Pell grants for students who enroll in its programs, including health care, business, criminal justice and transportation technology.

The department warned that it could revoke some of the company’s eligibility to receive federal funding. Usually, the money arrives a few days after a student enrolls. But the Department of Education pushed Corinthian into a financial bind on June 12 by imposing a 21-day delay in the disbursement of the federal aid funds. This “heightened cash monitoring,” the department said, was a response to the company’s failure to address “ongoing concerns over the company’s practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance.” Under the agreement, an independent monitor approved by the federal agency will review matters related to Corinthian’s operations, with full access to the company’s financial and operating records.

While Corinthian will be allowed to continue enrolling new students, it will have to reimburse any students who enroll in a campus found to be ineligible for federal student aid after the department’s review. “I find it disturbing that at a time when Corinthian is close to going out of business, they’re still going to allow new students to come to the ones they’re trying to sell,” said Stephen Burd, a senior policy analyst at the New America Foundation in Washington.

 Corinthian is under investigation by the Consumer Financial Protection Bureau and the Securities and Exchange Commission. It is also being sued by a number of attorneys general, including those in California and Massachusetts.

 Under the Obama administration, the Education Department has been increasing its oversight of for-profit institutions, whose students are more likely to take on large student debt and default on their student loans. The industry and the administration have been battling for several years over proposed “gainful employment” regulations, which would cut off eligibility for federal student loans for programs with too many graduates who default or earn too little money to make loan repayment realistic.

Thursday, May 15, 2014

For-profit college students lose right to take diploma mills to court

In the fall of 2011, Career Education Corporation (CECO) revealed that a significant number of its schools had cooked the books on the job placement rates they were disclosing to prospective students and regulators. Now investors in the giant for-profit higher education company are about to earn a nice profit for these misdeeds.
A federal judge has given his preliminary approval to a $27.5 million settlement that CECO has reached with shareholders to put an end to a lawsuit they brought accusing the company of deceiving them about its record of placing graduates into jobs. In contrast, most of the students who were the direct victims of this deception – with the exception of students from New York State who attended CECO’s campuses – are unlikely to receive any relief for these abuses. Instead, students who enrolled in these schools based on false promises will be stuck paying off loans they took out to pay for these programs for years.
What accounts for this disparity? The answer is that investors in for-profit colleges have access to the courts for filing their grievances, while most of the sector’s students do not.
Over the last several years, the for-profit higher education industry has succeeded – with the help of the U.S. Supreme Court – in stripping these students of their right to bring class action lawsuits against their schools. For-profit colleges have achieved this by including a clause in students’ enrollment agreements that requires them to settle any disputes with the schools through binding arbitration. By signing these documents, students, often unwittingly, sign away their right to bring their cases to court and in front of a jury.
Mandatory arbitration agreements – which have become increasingly common in all sorts of consumer contracts, including those for credit cards and private student loans – put students with legitimate grievances at an extreme disadvantage compared with pursuing their cases in court.
For one thing, for-profit colleges select the third-party arbitration company that is going to hear the case, creating an incentive for arbiters to go easy on companies in order to get repeat business. Binding arbitration clauses tend to bar class actions, forcing each student who has been harmed to bring his or her individual case against the schools. Industry officials know that many students are unlikely to pursue their cases because of the cost of doing so. In addition, discovery is often limited in arbitration cases, making it difficult for students to gather evidence of wrongdoing. And arbitration decisions generally cannot be appealed.
Although many for-profit college companies have included mandatory arbitration requirements in enrollment agreements for years, these clauses were not always ironclad. Some states, like California, have long had consumer protection laws that frown on the use of binding arbitration requirements banning class actions and jury trials. Courts in those states have previously allowed students scammed by unscrupulous schools to move ahead with legal challenges.
However, in 2011, the Supreme Court changed the rules of the game. In the case AT&T Mobility LLC v. Concepcion, the nation’s highest court ruled that states can’t reject arbitration clauses as “unconscionable” solely because they bar class action lawsuits and jury trials. That decision has shut down access to the courts for most for-profit college students, as well as for consumers of most financial products.
Even judges sympathetic to students’ complaints say their hands are tied as a result of the Supreme Court’s ruling. In his opinion in a case that students brought against Westwood College accusing the company of major recruiting abuses, Judge William J. Martinez of the U.S. District Court in Denver wrote in 2011 that he regretted having to require the plaintiffs to settle their dispute through arbitration. “There is no doubt that Concepcion was a serious blow to consumer class actions and likely foreclosed the possibility of any recovery for many wronged individuals,” he stated.
Students aren’t entirely out of luck. The U.S. Department of Education will, under very limited circumstances, discharge the loans of students who have been defrauded. Students may also benefit from settlements that the U.S. Department of Justice or state attorneys general reach with for-profit college companies, although the restitution provided in these cases is seldom sufficient to cover students’ full debt loads. For instance, students from New York who attended Career Education Corporation campuses in recent years and have not found employment in their fields of study will receive some compensation, as a result of a settlement that the New York Attorney General reached this summer with the company over its faulty job placement rate claims. Students in other states who were similarly misled, however, are out of luck.
Congress should eliminate this injustice by barring colleges that participate in the federal student aid programs from including binding arbitration clauses in enrollment agreements, just as Democratic Senators Tom Harkin of Iowa and Al Franken of Minnesota proposed last year. As they wrote, “Colleges and universities should not be able to insulate themselves from liability by forcing students to preemptively give up their right to be protected by our nation’s laws.”
Students who have been harmed by institutions should not have fewer legal rights than investors in these companies. The real victims of abuse deserve to have their day in court too.

This article by Stephen Burd first appeared in Inside Higher Ed. It is linked here.

Wednesday, May 7, 2014

Corinthian College for sale?

Inside Higher Ed reports that Corinthian College Inc., the notorious diploma mill, that abandoned Milwaukee and hundreds of students after a disastrous run in which more than 50% of its students did not graduate and less than 6% obtained jobs, is up for sale. 

Paul Fain writes: 
Corinthian Colleges signaled on Wednesday that it was open to merging or selling off all or part of its business. But the embattled for-profit chain faces a tough market, as well as looming regulatory and legal challenges.
The company’s various holdings now enroll 75,000 students, according to a corporate filing it released this week. That’s down almost 14 percent from last year. Corinthian also reported a roughly 12 percent decline in revenue for the first three months of this year, with a net loss of $80 million.
Jack Massimino, Corinthian’s chairman and CEO, told investors that the company had slashed annual costs by $125 million -- including layoffs of 1,350 employees -- to try to adjust to slumping enrollment. And it recently closed or sold seven of its Everest College campuses.
But while the cuts helped, Massimino said, the company is not out of the woods and expects future declines.
For example, Corinthian reported that is not in compliance with some of its bank debt covenants, and has sought waivers from certain lenders. The company also disclosed that it might be tripped up by a U.S. Department of Education financial responsibility test, which has caused Corinthianproblems in the past.
“In light of current market and regulatory conditions, our board has authorized management to retain an investment banking firm to help the company explore strategic alternatives and enhance shareholder value,” Massimino said in a written statement.
In the parlance of Wall Street, working with an investment bank on “strategic alternatives” means a possible sale or merger. Even so, that doesn’t mean Corinthian is courting buyers. The company might indeed sell off part of its operations. Or Massimino might just have been reassuring jittery investors by telling them the company is open to various options.
Corinthian may have been the most recent among the publicly traded for-profits to make a major deal, but as a buyer. In 2010 the company paid $395 million for Heald College, a regional for-profit with 11 campuses and 13,000 students. Besides Heald and Everest, the company also ownsWyoTech, a chain with a focus on automotive and other technology fields.
If Corinthian does attempt to unload Heald or other pieces, it will do so amid uncertainty about regulatory and legal issues.
The company, like most for-profits, is concerned about the possible impact of proposed gainful employment regulations. Those rules, which the Obama Administration is pushing, seek to crack down on vocational programs where graduates are struggling to find work and pay of debt.
Corinthian is being sued by attorneys general in California and Massachusetts. The California lawsuit alleges that the company paid temp agencies to hire its graduates in an attempt to boost job placement rates. And Corinthian has also said it is under investigation by the Consumer Financial Protection Bureau.
“The regulatory and legal issues facing the company are serious and we're working diligently to resolve them. Our near-term operating and financial challenges are equally pressing,” Massimino told investors on Wednesday, according to an earnings call transcript. “The good news is that Corinthian has resources that deliver value to students and that have the potential to, once again, create value for shareholders.”

Read more: http://www.insidehighered.com/news/2014/05/07/corinthian-colleges-contemplates-sale-amid-declining-enrollment-and-revenue#ixzz312FI6XYK
Inside Higher Ed 

Monday, April 21, 2014

New York Times Calls for Reigning in Predatory Schools

For-profit colleges like Everest, ITT , Kaplan and Sanford Brown have destroyed the education and career dreams of thousands of young people. 
These predatory institutions are gaming the federal financial aid system to line the pockets of their investors and CEOs by luring unsophisticated students to take out exorbitant student loans to attend programs whose credits do not transfer and that do not lead to gainful employment. The students end up with broken dreams and a lifetime of debt.
Senator Tom Harkin (Iowa) and Dick Durbin (illinois) and Representative Elijah Cummings (Maryland) are leading efforts in the United States Congress to hold these schools accountable.   
The Department of Education has been attempting to promulgate commonsense regulations that would protect student consumers from the for-profit's predatory practices. But the for-profit sector is waging a multi-million dollar lobbying effort to derail these efforts and protect their huge profit margins.
Last week the New York Times editorial board urged the Obama administration weighed in urging the Obama administration to resist these lobbying efforts and pass strong student protections. It wrote:
The for-profit college industry is pressuring the Obama administration to water down proposed new rules that would deny federal student aid to career training programs that saddle students with crippling debt while giving them useless credentials.
That’s a potent threat from the government, given that for-profit schools can get as much as 90 percent of their revenue from federal student aid programs. But it doesn’t go far enough. The administration should actually strengthen the rules to put the worst actors in this industry under tighter scrutiny.
The proposed rules require career training programs to meet two reasonable standards to remain eligible for federal aid. The estimated annual loan payment of the typical graduate should not exceed 20 percent of discretionary earnings, or 8 percent of total annual earnings. And the default rate for former students should not exceed 30 percent.
The overall approach is sound. But the percentage of people who are actually paying down their loans should also be taken into account to make sure that students are earning enough money to meet their responsibilities. If the repayment rate is left out of the picture, schools might escape sanctions by putting students in temporary forbearance programs that push loan defaults into the future.
The for-profit industry is fighting hard against even the more limited proposed rules, and it is lobbying Congress to stop them. It claims that the new federal requirements would limit educational opportunity, particularly for poor minority students who might not qualify for traditional private or public colleges. The facts, however, show that for-profit schools often hurt the poor by luring them into questionable programs that cost considerably more than comparable courses of study at community colleges.
According to federal data, graduates of two-year, for-profit career training programs average a loan debt of $23,590. By contrast, most community-college graduates owe nothing.
The Department of Education recently reported that, of the thousands of for-profit programs it analyzed, an astonishing 72 percent produced graduates who, on average, earned less than a high school dropout who worked full time. This means that the most debt-ridden students are unlikely to earn enough to ever repay their loans. While students at for-profit colleges are 13 percent of the total higher education enrollment, they account for nearly half of all student loan defaults.
The department’s analysis, which covered both for-profit and nonprofit career programs, found that 98 percent of the students enrolled in the lowest-performing programs are in for-profit schools.
And among the certificate programs most commonly found to be substandard are the ones that typically advertise on buses and subways in cities all over the country, targeting less sophisticated audiences; these include programs that claim to train cosmetologists, medical assistants, paralegals and other fields.
For the sake of poor students and their families all over the country, the Obama administration needs to issue strong rules that will push substandard programs to improve and force predatory schools out of business.