Tuesday, March 16, 2010

NY Times exposes Corinthian while Milwaukee welcomes it

A month ago, the Milwaukee Board of Zoning Appeals (BOZA) approved a zoning variance that allows Corinthian College, a diploma mill with a notorious record of exploiting students, to establish operations directly on the dorrstep of Milwaukee Area Technical College (MATC) and the Hillside Housing Project.

The change was opposed by a broad coalition including the Hillside Residents Council, Millele Coggs, the area's alderwomen, five other aldermen, the NAACP, Voces del la Frontera, MATC's Latino Student Organization, Good Jobs and Livable Neighborhoods, and the American Federation of Teachers Local 212.

After a critical article and skeptical editorial appeared in the Milwaukee Journal Senetinel, Corithian hired Milwaukee PR flak Evan Zeppos to make its case. Zeppos enlisted the Metropolitan Milwaukee Chamber of Commerce's Tim Sheeehy. Sheehy's support was apparently all that was need to convince the MJS editorial board to support Corinthian. In a particularly cynical editorial, the editorial board urged BOZA to support Corinthian's efforts as a simple "land use issue"..."that could provide a boost to development in the adjacent Park East Corridor."

It cautioned; "...the school must guard against being seen as an institution that preys on rather then helps young urban students..."

The editorial board's position is inane because Corinthian's problem is not about perception or public relations. It is an institution that PREYS on young urban students. It's student default rate is is 250% of the national average for all higher education institutions, and 140% of the national average 3-Year Student Loan Default Rate at for-profit institutions.

These startling results are the direct result of Corinthian's record of manipulating and exploiting students that has generated lawsuits, negative publicity and investigations including a recent $6.5 million settlement with the state of California. Its business plan is based on luring low income people to take out guaranteed federal loans that they have no reasonable chance of repaying.

In a recent call with investors and analysts, Corinthian Colleges, Inc. said it fully expects a shocking 56 to 58 percent of the borrowers to default. Yet they consider these loans good investments because they will increase enrollment and with it a profitable flow of federal grant and loan dollars that outweighs the planned writeoff.
While several other Alderman vocally opposed the development, the Department of City Development (DCD) originally championed it and the Mayor failed to use his influence to derail it. When the final vote was taken several members of BOZA cited the city's support for the development as the reason for their affirmative vote.

Corinthian is in the sub-prime student loan business. It preys on students dreams for a better life and leaves them with nothing but mountains of debt. That is why the investor magazine Barron's, described Corinthian as a "high-pressure sales operations bent on vacuuming up student-loan dollars."

It is unconscionable that the Milwaukee top elected officials are assisting an unsavory business with as dismal a record as Corinthian's.

Is DCD really so desperate for investment that it will support any development no matter how exploitative?

On Sunday, the New York Times exposed Corinthian and other for-profit colleges. Peter Goodman wrote:

Their ...profits have come at substantial taxpayer expense while often delivering dubious benefits to students...Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

“If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment,” said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. “They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.” these schools have exploited the recession as a lucrative recruiting device while tapping a larger pool of federal student aid."

Wyotech, a Corinthian's subsidiary,is highlighted in the article: "

Jeffrey West was working at a pet store near Philadelphia, earning about $8 an hour, when he saw advertisements for training programs offered by WyoTech, a chain of trade schools owned by Corinthian Colleges Inc., a publicly traded company that last year reported revenue of $1.3 billion.

After Mr. West called the school, an admissions representative drove to his house to sell him on classes in auto body refinishing and upholstering technology, a nine-month program that cost about $30,000.

Mr. West blanched at the tuition, he recalled, but the representative assured him the program amounted to an antidote to hard economic times.

“They said they had a very high placement rate, somewhere around 90 percent,” he said. “That was one of the key factors that caused me to go there. They said I would be earning $50,000 to $70,000 a year.”

Some 14 months after he completed the program, Mr. West, 21, has failed to find an automotive job. He is working for $12 an hour weatherizing foreclosed houses.

With loan payments reaching $600 a month, he is working six and seven days a week to keep up.

I’ve got $30,000 in student loans, and I really don’t have much to show for it,” he said. “It’s really frustrating when you’re trying to better yourself and you wind up back at Square One.”

Corinthian is coming to Milwaukee to prey on Milwaukee's urban students at the invitation of a local developer and with the apparent blessing of DCD, the Mayor's office and the Journal Sentinel editorial board.

When their ex-students end up with broken dreams and mountains of debt will City Hall and the Journal Sentinel editorial board be there to help pick up the pieces?

1 comment:

Anonymous said...

Very Interesting!
Thank You!