Wednesday, October 29, 2014

Civil rights orgs seek strong gainful employment rule

 A coalition of eight civil rights organizations released a policy brief today urging the U.S. Department of Education to release a strong gainful employment regulation to protect students, particularly African-American and Latino students, from substandard career education programs.

The brief, “Gainful Employment: A Civil Rights Perspective,” documents the adverse outcomes that African-American and Latino students experience as a result of policies and practices implemented at for-profit colleges.  Students at for-profit colleges are much less likely to graduate, more likely to default, and more likely to incur debt than students at public and non-profit schools. The brief details how a strong gainful employment rule will provide much needed protections to both students and taxpayers.

In Milwaukee, for-profit colleges have targeted low-income and minority students with promises of job placement and a career, but delivered little more than huge debts. Yesterday, the Wisconsin Attorney General sued Everest College for its fraudulent practices, including a job placement rate of 5%. But others like Globe University, ITT, Kaplan and the Art Institute continue to game the federal financial aid system, a source of 90% of for-profit college revenues, and enroll unsuspecting students.
 
“Stronger oversight is desperately needed to tackle the problems of poor outcomes and high debt within career education programs,” the brief urges. “Currently, even when better and lower cost options are available, African-American and Latino students are disproportionately enrolled in schools where they are both likely to borrow and unlikely to succeed, and there are few incentives for schools to improve poorly performing programs.” font-family: arial, sans-serif; font-size: 12px;">

Click here to download the brief.

The brief was released by the Center for Responsible Lending, the Children’s Defense Fund, the Lawyers’ Committee for Civil Rights Under the Law, The Leadership Conference on Civil and Human Rights, MALDEF, the NAACP, the NAACP Legal Defense and Educational Fund, and the National Council of La Raza.

Wednesday, October 15, 2014

14 Attorney Generals endorse legislation regulating for-profit schools

More than six months after a bill that would improve coordination and oversight of the for-profit college industry was introduced in the Senate and House, a number of state attorney generals have signed on in support.

Fourteen attorneys general sent a letter [PDF] of support to senators Dick Durbin, of Illinois and Tom Harkin, of Iowa, as well as representative Elijah Cummings of Maryland for their efforts in introducing the Proprietary Education Oversight Coordination Improvement Act in the Senate and House back in April.

The AGs are from a diverse group of states- Arkansas, Connecticut, Illinois, Iowa, Kentucky, Maine, Maryland, Mississippi, Missouri, Nevada, New Mexico, Oregon, Pennsylvania and Tennessee

Wisconsin’s AG, J.B. Van Hollen, is absent from this list despite the fact that thousands of students from Wisconsin have accumulated huge debts attending for-profit colleges and many of these schools have abysmal job placement and graduation rates. The Wisconsin’s Education Approval Board attempted to pass state standards for these schools in 2011, but their efforts were undermined by intense industry opposition and Governor Walker’s decision to dismiss three members of the governing Board.

The issue emerged in Wisconsin’s Attorney General race last week during a debate. When asked what they would change if elected, Jefferson County DA and Democratic candidate for AG, Susan Happ, said she would aggressively prosecute for-profit colleges that engaged in fraudulent activity while Brad Schimel, the Waukesha County DA and Republican candidate, said he would not.  

The Ag’s letter released Tuesday, October 7th said the that the proposed Act “is both timely and necessary as each of our offices have encountered far too many former and current for-profit school students who have been harmed by the dishonest and unethical practices of some for-profit institutions.”

The group says passage of the Act, which would create an interagency oversight committee to improve enforcement of federal laws and regulations as they pertain to the industry, will provide a mechanism to hold for-profit schools accountable for accepting billions of dollars in taxpayer money.

“There are some schools within the for-profit college industry that are more interested in getting their hands on federal student loan dollars than in educating students,” Kentucky Attorney General Jack Conway says in a news release. “The for-profit college industry lacks real oversight and accountability at the federal level, and this legislation will help prevent future abuses of the student loan system and keep for-profit schools honest.”

The proposed Proprietary Education Oversight Coordination Committee would consist of representatives from the Dept. of Education, Consumer Financial Protection Bureau, the Dept. of Justice, Securities and Exchange Commission, Dept. of Defense, Dept. of Veteran Affairs, Federal Trade Commission, Dept. of Labor, and Internal Revenue Service.

The committee would work with attorneys general at the state level to coordinate federal and state activities related to the for-profit college industry. Currently, several states, including Kentucky and California, are party to lawsuits against proprietary colleges for misleading students about job placement rates.

The group applauded the proposed bill’s proactive stance by warning prospective students about specific, allegedly predatory schools.

Each year the committee established under the bill would publish a warning list of schools that have engaged in illegal activities, had programs withdrawn or suspended and or have been proven to engage in abuse, unethical, fraudulent or predatory practices. The measure would arm students with information that could prevent them from falling into the debt-trap that has become the for-profit college industry.

“State Attorneys General across the country hear complaints from students who have attended for-profit schools,” the letter of support states. “The students are drowning in debt because they have huge student loan liabilities and no job to show for those huge debts.”

There have been several high-profile events and reports regarding the for-profit industry since the bills introduction several months ago.

In early summer, the Department of Education cut off the funnel of federal dollars received by Corinthian Colleges Inc, the operator of for-profit schools Everest University, Heald College and WyoTech. As a result, CCI agreed to sell or close the vast majority of its campuses across the country.

Back in September, the Consumer Financial Protection Bureau announced it was suing CCI for allegedly duping tens of thousands of student into taking out costly predatory, and often financially devastating student loans. The suit seeks to halt CCI’s practices and provide relief to students who have collectively taken out $569 million in school issued private student loans.

Also in September, ITT Education Services announced it was under increased scrutiny from Securities & Exchange Commission and the Department of Education for failure to provide financial statements.

The Proprietary Education Oversight Coordination Improvement Act currently awaits the consideration from Health, Education, Labor and Pension committee in the Senate and consideration from the Higher Education and Workforce Training committee in the House.

Tuesday, October 7, 2014

Happ announces plan to crack down on for-profit scams

Jefferson — Attorney General candidate Susan Happ will crack down on the growing number of for-profit colleges that prey on Wisconsin students and veterans, she said Friday.

“Unscrupulous for-profit colleges are luring students with promises they can’t keep, leaving many of them with no degrees of little value or no degrees at all, but mountains of debt,” Happ said. “As Attorney General, I will investigate, prosecute and seek hefty penalties for deceptive practices, and work to see that students are made whole,” she said. 


In a policy paper issued Friday, Happ said veterans are a special target of the for-profit schools because of a provision in federal law that works to the schools’ advantage if they receive veterans’ benefits. 

Many for-profit colleges across the nation and in our state play by the rules and provide Wisconsin students with a solid education.” Happ said. “These by-the-book colleges, however, have to compete with an increasing number of schools utilizing high pressure sales techniques that misrepresent the costs and benefits of the programs they offer, their graduation placement rate, their accreditation status and whether credits will transfer to another institution.” 

Their high-pressure tactics and deceptive marketing violate state consumer protection laws,” Happ said. “We will seek hefty penalties, sending a message that Wisconsin will not permit them to profit from peddling a subpar education to our veterans and low-income students who need it the most.” 

Happ’s plan also calls for partnering with other state Attorneys General and federal agencies to adopt best practices from other states, supporting legislation and regulation to help curb the deceptive practices, and collaborating with the state Dept. of Veterans Affairs, the federal Veterans Administration, and other agencies serving Wisconsin veterans to educate veterans about the perils of dealing with some in the industry, and warning them about what to watch for when choosing a college. 

There are currently 162 post-secondary for-profit institutions servicing Wisconsin students. While most have a presence in the state, many are located out of state but service Wisconsin students. The Wisconsin Educational Approval Board estimates 26,000 Wisconsin students attend for-profit online colleges annually, paying nearly $155 million in tuition to mostly out-of-state companies.

Wednesday, September 17, 2014

Federal Government sues Corinthian College

Yesterday,  the Consumer Financial Protection Bureau (CFPB) sued for-profit college chain Corinthian Colleges, Inc. for its illegal predatory lending scheme. The Bureau alleges that Corinthian lured tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. To protect current and past students of the Corinthian schools, the Bureau is seeking to halt these practices and is requesting the court to grant relief to the students who collectively have taken out more than $500 million in private student loans.

“For too many students, Corinthian has turned the American dream of higher education into an ongoing nightmare of debt and despair,” said CFPB Director Richard Corday. “We believe Corinthian lured consumers into predatory loans by lying about their future job prospects, and then used illegal debt collection tactics to strong-arm students at school. We want to put an end to these predatory practices and get relief for the students who are bearing the weight of more than half a billion dollars in Corinthian’s private student loans.”

The complaint against Corinthian can be found at: http://files.consumerfinance.gov/f/201409_cfpb_complaint_corinthian.pdf

Corinthian Colleges, Inc. is one of the largest for-profit, post-secondary education companies in the United States. The publicly traded company has more than 100 school campuses across the country. The company operates schools under the names Everest, Heald, and WyoTech. As of last March, the company had approximately 74,000 students.

Corinthian opened an Everest College campus in Milwaukee in 2011 with the support of the Metropolitan Milwaukee Chamber of Commerce's President Tim Sheehy and the Commissioner of the Department of City Development Rocky Marcoux. Controversial from the start because of lawsuits alleging fraudulent practices in other states, Corinthian closed its Milwaukee Everest campus less than two years after it opened. At the time it closed, Everest had a drop-out rate of more than 50% and a job placement rate of less than 6%. 

In June, the U.S. Department of Education delayed Corinthian’s access to federal student aid dollars because of reports of malfeasance. Since then, Corinthian has been scaling down its operations as part of an agreement with the Department of Education. However, Corinthian continues to enroll new students.

Today’s CFPB lawsuit alleges a pervasive culture across the Everest, Heald, and WyoTech schools that allowed employees to routinely deceive and illegally harass private student loan borrowers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Based on its investigation, the CFPB alleges that the schools made deceptive representations about career opportunities that induced prospective students to take out private student loans, and then used illegal tactics to collect on those loans. Today’s lawsuit covers the period from July 21, 2011 to the present.

Lured Into Loans By Lies
Most students who attend Everest, Heald, and WyoTech schools come from economically disadvantaged backgrounds and many are the first in their families to seek an education beyond a high school diploma. According to internal Corinthian documents, most students lived in households with very low income. Today’s lawsuit alleges that the schools owned by Corinthian Colleges, Inc. advertised their education as a gateway to good jobs and better careers. It alleges that throughout the Corinthian schools, consumers were lured into loans by lies, including:
 ·         Sham job placement rates: The CFPB alleges that Corinthian’s school representatives led students to think that when they graduated they were likely to land good jobs and sufficient salaries to repay their private student loans. But the CFPB believes that Corinthian inflated the job placement rates at its schools. Based on its investigation, the CFPB alleges that this included creating fictitious employers and reporting students as being placed at those fake employers.

·         One-day long “career”: According to the CFPB’s investigation, Corinthian schools told students they would have promising career options with an Everest, Heald, or WyoTech degree. But Corinthian counted a “career” as a job that merely lasted one day, with the promise of a second day.

·         Pay for placement: The CFPB also alleges that the Corinthian schools further inflated advertised job placement rates by paying employers to temporarily hire graduates. The schools did not inform students about these payments or that these jobs were temporary.

·         Craigslist career counseling: According to the CFPB’s investigation, the Corinthian schools promised students extensive and lasting career services that were not delivered. Students often had trouble contacting anyone in the career services office or getting any meaningful support. The limited career services included distributing generally available job postings from websites like Craigslist.

Predatory Loans
Tuition and fees for some Corinthian programs were more than five times the cost of similar programs at public colleges. In 2013, the Corinthian tuition and fees for an associate’s degree was $33,000 to $43,000. The tuition and fees for a bachelor’s degree at Corinthian cost $60,000 to $75,000.

The CFPB believes the Corinthian colleges deliberately inflated tuition prices to be higher than federal loan limits so that most students were forced to rely on additional sources of funding. The Corinthian schools then relied on deceptive statements regarding its education program to induce students into taking out its high-cost private student loans, known as “Genesis loans.” Today’s lawsuit alleges that under the Genesis loan program:

·         Interest rates were more than twice as expensive: Corinthian sold its students predatory loans that typically had substantially higher interest rates than federal loans. In July 2011, the Genesis loan interest rate was about 15 percent with an origination fee of 6 percent. Meanwhile, the interest rate for federal student loans during that time was about 3 percent to 7 percent, with low or no origination fees.


  •  Loans were likely to fail: Corinthian expected that most of its students would ultimately default on their Genesis loans. In fact, more than 60 percent of Corinthian school students defaulted on their loans within three years. The Everest, Heald, and WyoTech schools did not tell students about these high default rates. Defaulting on private student loans can have grave consequences for consumers, including affecting a borrower’s job prospects and making it difficult to get any kind of loan for years. 



Strong-Armed by Illegal Debt Collection Tactics
Under the Genesis loan program, nearly all student borrowers were required to make monthly loan payments while attending school. This is unusual; federal loans and almost all other sources of private student loans do not require repayment until after graduation. This put pressure on Everest, Heald, and WyoTech students to come up with funding while attending school. Today’s lawsuit alleges that Corinthian took advantage of this position of power to engage in aggressive debt collection tactics. The CFPB alleges that Corinthian’s campus staff members received bonuses based in part on their success in collecting payments from students. The debt collection tactics included:

·         Pulling students out of class: The CFPB’s investigation revealed that Corinthian’s efforts to collect payments included shaming students by pulling them out of class. Financial aid officers would inform instructors and other staff that students were past due on their Genesis loans. Corinthian schools also required students to meet with campus presidents to discuss the seriousness of the overdue loans. At one Corinthian campus, students and employees referred to one financial aid staff member as the “Grim Reaper” because the staff member so frequently pulled students out of class to collect debts.

·         Putting education in jeopardy: According to the CFPB’s investigation, the Corinthian colleges jeopardized students’ academic experience by denying them education until they paid up. They blocked students’ access to school computer terminals and other academic resources. The Corinthian schools also prevented students from attending and registering for class, and from receiving their books for their next classes.

·         Withholding diplomas: According to the CFPB investigation, Corinthian schools informed students that they could not participate in the graduation ceremony or would have their certificate withheld if they were not current on their Genesis loan in-school payments. In many cases, financial aid staff threatened that if students did not become current on their loans, they could not graduate or start their externships. Some former students stated that Corinthian schools continue to withhold their certificates because they are unable to make payments on their Genesis loans.

Halting Illegal Conduct and Obtaining Relief for Private Student Loan Borrowers
Today’s lawsuit seeks, among other things, compensation for the tens of thousands of students who took out Genesis loans. The CFPB estimates that from July 2011 through March 2014, students took out approximately 130,000 private student loans to pay tuition and fees at Everest, Heald, or WyoTech colleges. Some of these loans have been paid back in part or in full; the total outstanding balance of these loans is in excess of $569 million.

The CFPB is seeking redress for all the private student loans made since July 21, 2011, including those that have been paid off. In its lawsuit, the CFPB is also seeking to keep Corinthian from continuing the illegal conduct described above, and to prevent new students from being harmed.

Today the CFPB is also publishing a special notice for current and former Corinthian students to help them navigate their options in this time of uncertainty, including information on loan discharge options.

The CFPB Notice for Current and Former Corinthian Students can be found at: http://files.consumerfinance.gov/f/201409_cfpb_notice-for-current-and-former-corinthian-students.pdf

The CFPB estimates that there is approximately $1.2 trillion in outstanding student loan debt, with more than 7 million Americans in default on more than $100 billion in balances. Students and their families can find help on how to tackle their student debt on the CFPB's website.

The Bureau’s complaint is not a finding or ruling that the defendant has actually violated the law.


Monday, September 1, 2014

Labor Day: America needs a full employment agenda

Editorial reprinted from the NYTimes

In the months before Labor Day last year, job growth was so slow that economists said it would take until 2021 to replace the jobs that were lost or never created in the recession and its aftermath.
The pace has picked up since then; at the current rate, missing jobs will be recovered by 2018. Still, five years into an economic recovery that has been notable for resurging corporate profits, the number and quality of jobs are still lagging badly, as are wages and salaries.
In 2013, after-tax corporate profits as a share of the economy tied with their highest level on record (in 1965), while labor compensation as a share of the economy hit its lowest point since 1948. Wage growth since 1979 has not kept pace with productivity growth, resulting in falling or flat wages for most workers and big gains for corporate coffers, shareholders, executives and others at the top of the income ladder.
Worse, the recent upturn in growth, even if sustained, will not necessarily lead to markedly improved living standards for most workers.
That’s because the economy’s lopsidedness is not mainly the result of market forces, but of the lack of policies to ensure broader prosperity. The imbalance will not change without labor and economic reforms.
For instance, new research from the Economic Policy Institute shows that from the first half of 2013 to the first half of 2014, hourly wages, adjusted for inflation, fell for nearly everyone. An exception was a small gain for the bottom 10 percent of wage earners, which was because of minimum-wage increases in 13 states this year.
That’s clear evidence that raising the federal minimum wage, while only a first step toward better pay, would have a powerful effect. A lift from the current $7.25 an hour to the modest $10.10 called for by President Obama and Democrats in Congress would put an estimated additional $35 billion in the pockets of affected workers over a three-year phase-in period.
Unionization is also associated with higher wages and benefits, especially for low-wage workers, which argues for greater legal enforcement of the right to organize without retaliation.
Similarly, stronger enforcement of both labor laws and antitrust laws is needed to ensure against wage theft. Once assumed to be mainly an issue of unpaid overtime or other wage violations, wage theft became a white-collar issue this year, when it was revealed that collusion among the biggest companies in Silicon Valley had suppressed the pay of software engineers by an estimated $3 billion.
The pay of middle-income workers has also been diminished. Decades of outsourcing government jobs to the private sector has undercut public employment, once a mainstay of middle-class life, even as evidence has mounted that outsourcing often does not save money or improve services. What’s needed is a systematic review of government contracts with the private sector and a willingness to end those that are counterproductive.
Another threat to middle-class wages is rampant misclassification — of employees as independent contractors and of workers as supervisors — a tactic that employers use to deny pay and benefits that would otherwise be due. In a promising development, a federal appellate court recently ruled that drivers for FedEx in California are employees, not independent contractors, an example of the courts stepping in when the other branches of government have let an injustice persist.
There has been progress since last Labor Day. Mr. Obama has signed executive orders to improve the pay and working conditions of employees of federal contractors. The Labor Department is revising rules on overtime pay; simply updating them for inflation would make millions of additional workers eligible for time-and-a-half for overtime.
What is still lacking, however, is a full-employment agenda that regards labor, not corporations, as the center of the economy — a change that would be a reversal of the priorities of the last 35 years.

Monday, August 25, 2014

Study: for-profit college degrees have no value in labor market

A recent study conducted by the National Center for Analysis of Longitudinal Data in Education Research found that students who graduated from for-profit colleges with thousands of dollars in student loan debt have the same chances of getting called back for an interview as a peer who has no college experience at all and zero student loan debt.

According to a report released in 2012, the average cost for a two-year associate’s degree at a for-profit college is $35,000 compared to $8,300 for a similar degree at a community college. The same study also shows that roughly 60%of for-profit college students take out a student loan versus just 13% of community college students.

Researchers of the study sent nearly 9,000 fake résumés to job openings in six different career categories and compared those responses to the responses of applicants that had community college experience or no college experience at all. font-family:

Hopefully, studies like these will have scholars thinking twice before they fall for the next for-profit college commercial seen on television.