Thursday, September 22, 2011

For-profit colleges target veterans

New York Times

MILITARY personnel and their families are finding themselves under siege from for-profit colleges. A number of these schools focus on members of the armed forces with aggressive and often misleading marketing, and then provide little academic, administrative or counseling support once the students are enrolled.

Vast sums are involved: between 2006 and 2010, the money received in military education benefits by just 20 for-profit companies soared to an estimated $521.2 million from $66.6 million.

The government provides two important educational benefits to service members: the Tuition Assistance program for service members on active duty, and the G.I. Bill, which is mostly used for education after military service.

Today’s veterans are eager to earn post-secondary degrees — and to replicate the example of the generation that returned from World War II and fueled our prosperity. But their desire for learning is too often exploited by unscrupulous for-profit colleges.

The schools have a strong incentive to enroll service members and veterans, in large part because of the “90-10 rule” created by the 1998 amendments to the Higher Education Act. Put simply, the rule says that a for-profit college must obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid. Funds from Tuition Assistance and the G.I. Bill are not defined as Title IV funds, so they count toward the 10 percent requirement, just like private sources of financing.

Therein lies a problem. For every service member or veteran (or spouse or child, in the case of the post-9/11 G.I. Bill) enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but Title IV money.

This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses.

One of the most egregious reports of questionable marketing involved a college recruiter who visited a Marine barracks at Camp Lejeune, N.C. As the PBS program “Frontline” reported, the recruiter signed up Marines with serious brain injuries. The fact that some of them couldn’t remember what courses they were taking was immaterial, as long as they signed on the dotted line.

Some for-profit colleges have also created Web sites with military-sounding names. Although they present themselves as offering unbiased advice on G.I. Bill benefits, some are using deceptive methods to bring in students.

For example, I looked at one of these sites and found that the schools listed on the home page as “G.I. Bill schools” all happened to be for-profit colleges. On another site, a member of my staff filled out an application asking what the school would recommend if he had a law degree and a postdoctoral degree in physics. Their suggestion: get a vocational certificate at a local for-profit college.

To be sure, there are some for-profit colleges with a long record of serving the military, solid academic credentials and a history of success for their graduates. But, compared with other schools, for-profit colleges generally have low graduation rates and a poor record of gainful employment for their alumni.

A number of for-profit colleges have questionable academic credentials or lack accreditation accepted by other institutions. This makes it very difficult for students to transfer credits to other schools. Not surprisingly, for-profit colleges also tend to have a higher-than-average student loan default rate, which means that, in the end, the college experience there may hinder, rather than help, the careers and financial prospects of their graduates.

Prior to the Military Lending Act of 2007, which capped the annual interest rate for some consumer loans to service members at 36 percent, they were victims of unchecked payday lending and other predatory financial services. I see a parallel in what is happening today with for-profit colleges.

As long as military education funds are on the 10 percent side of the 90-10 rule, service members will be a lucrative target for exploitation. As Congress explores legislative solutions at a hearing today, it is critical that federal agencies redouble efforts to prevent aggressive and deceptive practices. The benefits provided to our military and their families should not be wasted on programs that do not promote — and may even frustrate — their educational goals.

Hollister K. Petraeus is the assistant director for service member affairs at the Consumer Financial Protection Bureau. Her husband, David H. Petraeus, is the director of the C.I.A. and a retired Army general who commanded American forces in Iraq and Afghanistan.

Tuesday, September 13, 2011

Student default rates soar at for-profit colleges

The proportion of borrowers defaulting on federal student loans continued to increase during the Great Recession, according to Education Department data released Monday.

The two-year "cohort" default rate, which represents the proportion of federal loan borrowers who entered repayment between October 2008 and September 2009 and had defaulted on their loans by the end of September 2010, increased to 8.8 percent, the highest such rate since 1997. The rate increased 1.8 percentage points from fiscal 2008.

While students in all sectors were likelier to default on their loans than they had been the previous year, defaults increased the most at for-profit colleges: 15 percent of borrowers from those institutions defaulted in 2009, compared with 11.6 percent in 2008. That was more than twice the rate at public and not-for profit private institutions. Critics have compared for-profit colleges' exhorbitant tuitions and the huge federal loans students take out to pay them to the sub-prime mortgage bubble that led to the Great Recession.  

Defaults increased to 7.2 percent at public institutions, from 6 percent in the 2008 fiscal year. At private institutions, the default rate increased from 4 percent in 2008 to 4.6 percent in 2009.

The rates are the first to consist entirely of loans that entered repayment during the worst of the economic downturn, and Education Department officials pointed to the bad economic situation as a major factor in the increase in defaults. Defaults tend to increase as unemployment rises, and delinquency rates on other types of credit, such as mortgages and credit cards, increased during the same period, they said.

But officials also pointed to booming enrollments at for-profit colleges as a contributing factor. Default rates have historically been higher for students at for-profit institutions. Nearly half of the 320,000 defaulting borrowers who began repayment in fiscal 2009 were enrolled at for-profit colleges, said James Kvaal, the deputy undersecretary for education, during a conference call with reporters.

Since fiscal year 2005, default rates over all have nearly doubled, from 4.6 percent in 2005 to 2009’s 8.8 percent. Still, default rates are far from their peak in 1990, when 22.4 percent of students defaulted on their loans and the Education Department shut down dozens of programs.

The department cautioned that the actual default rate may in fact be higher, because many colleges encourage their students to seek forbearance or defer payments rather than go into default. While that sometimes can help students repay their loans, in many cases it just delays the default beyond the two-year window, Kvaal said. The Project on Student Debt called Monday’s figures “the tip of the iceberg,” noting that most defaults occur after two years.

Next year, the department will begin using three-year default rates to evaluate programs, meaning that the rate will increase. Trial three-year default rates for 2009 will be released in spring 2012.

Five institutions, four of them for-profits, will lose eligibility for federal student loans due to high default rates: Tidewater Technical, in Norfolk, Va.; Trend Barber College in Houston; Missouri School of Barbering and Hairstyling in St. Louis; Sebring Career School, in Houston, and Human Resource Development and Employment-Stanley Technical Institute, in Clarksburg, W.V. Institutions must have default rates that exceed 40 percent in one year or 25 percent for three consecutive years to incur sanctions.

Wednesday, September 7, 2011

Culinary school graduates claim they were ripped off, sue to get their money back

SAN FRANCISCO - Food enthusiasts have been enrolling in culinary school in growing numbers, lured by dreams of working as gourmet chefs or opening their own restaurants.

For many graduates, however, those dreams have turned into financial nightmares, as they struggle to pay off hefty student loans and find work in a cutthroat industry known for its long hours and low pay.

Now, some former students are suing for-profit cooking schools to get their money back, saying they were misled by recruiters about the value of culinary education and their job prospects after graduation.

"They just oversold it and pushed it. They made misleading statements to lure you in," said Emily Journey, 26, a plaintiff in a class-action lawsuit against San Francisco's California Culinary Academy, part of Career Education Corp.'s chain of 16 Le Cordon Bleu cooking schools.

Journey, however, may get some of her money back. Under a pending $40 million settlement in state court, Career Education has agreed to offer rebates up to $20,000 to 8,500 students who attended the academy between 2003 and 2008.

In 2004, Journey was a recent high school graduate, dreaming of opening her own bakery, when she enrolled in a 7-month program in pastry and baking arts at the San Francisco school. Recruiters convinced her it was a worthwhile investment and helped her borrow $30,000 to pay for it.

After finishing the program, the only job she could find paid $8 an hour to work the night shift at an Oregon bakery — "something anyone could have gotten without a culinary certificate," she said.

Journey, who now lives in Bakersfield, has abandoned her baker's dream and now plans to attend community college to become a nurse or dietitian. Without the settlement money, she will be paying for that culinary certificate for another 15 years.

"Was it worth the money and the time to have this loan hanging over my head?" she asked. "Absolutely not."

Two other Le Cordon Bleu schools — the California School of Culinary Arts in Pasadena and the Western Culinary Institute in Portland — also face lawsuits from former students who say they were duped by deceptive advertising, particularly the schools' job placement rates.

Schaumburg, Ill.-based Career Education denies its recruiting and marketing practices are illegal, but its schools recently changed their policies to "ensure that students understand that we are not promising any specific job outcomes or salaries," said spokesman Mark Spencer.

The publicly traded company, which operates more than 90 career colleges worldwide, agreed to settle the San Francisco lawsuits because they were too expensive to litigate and distracting to employees, Spencer said.

Enrollment at for-profit colleges and trade schools has surged over the past decade, fueled by federal student aid that makes up as much as 90 percent of revenue at many institutions. Profit-driven career colleges are facing heavy criticism for their aggressive recruiting and marketing practices, as well as their graduates' low rates of loan repayment.

Students who attend for-profit institutions represented 12 percent of all college students in 2009, but 43 percent of those who defaulted on federal student loans, according to a recent report by The Education Trust, an education advocacy group.

"It's a business predicated on volume, not quality. How many students can you get to sign on the dotted line?" said Jose Cruz, the group's vice president for higher education policy. "It's a debt that takes over their financial life."

Career Education has capitalized on the growing interest in culinary education, fed by popular television shows such as the Food Network's "Iron Chef," Fox Broadcasting's "Hell's Kitchen" and Bravo's "Top Chef."

Enrollment at the company's 16 Le Cordon Bleu cooking schools increased from 8,400 in 2008 to 13,100 in 2010, according to Career Education officials.

Le Cordon Bleu officials defend the value of a culinary education, saying many restaurants, hotels and hospitality companies don't have the time or money to train employees.

"Culinary arts education today gives people a much-needed foundation they need to be successful," said Edward Leonard, vice president and corporate chef for Le Cordon Bleu Schools in North America.

School officials point to alumni such as Jill Barton, a 2005 California Culinary Academy graduate who recently opened a crepe shop in Santa Barbara, or Gonzalo del Castillo, a 2007 graduate who co-owns a San Francisco tapas bar.

The academy's tuition and fees range from $21,000 for a certificate in pastry and baking arts to $43,000 for an associate's degree in culinary arts. Those costs don't include books, supplies, or room and board.

The school's website says 48 to 100 percent of graduates find work in their field of study or a related field, depending on the program or methodology.

Critics say many of those jobs don't pay much more than minimum wage and don't require formal culinary education.

"It is a ridiculous business decision to attend one of these schools," said attorney Ray Gallo, who represents plaintiffs suing the California Culinary Academy. "The whole thing doesn't make economic sense. They know it and they don't tell you."

In June, the U.S. Department of Education in June issued new regulations aimed at protecting students who attend private career colleges. Under the new rules, a school can only have access to federal student aid if at least 35 percent of its graduates are repaying their loans — or if graduates' annual loan payments don't exceed 12 percent of their earnings.

Critics say the new rules are a small step in the right direction, but don't go far enough.

"Unfortunately, it's really a buyer-beware environment for people seeking higher education at culinary schools or other kinds of training programs," said Lauren Asher, who heads the nonprofit Institute for College Access and Success.

Matt Foist, 46, regrets his decision to borrow $45,000 to attend the California Culinary Academy in 2005, when the Silicon Valley software engineer was looking for a career change.

"They did a great job of selling it to me," Foist said. "I was kind of tricked into believing that I would become a highly regarded chef in the San Francisco area and that I would make a lot more money than the reality turned out to be."

After realizing he wouldn't be able to earn enough to cover his student loans, he decided to stick with software engineering. Five years later, he said he's barely made a dent in paying off his culinary school debt, though the settlement money will help if it comes through.

His advice to people contemplating culinary school: "Don't go. Go to a community college."

Saturday, September 3, 2011

In honor of Teachers

New York Times, September 3, 2011

Since it’s back-to-school season across the country, I wanted to celebrate a group that is often maligned: teachers. Like so many others, it was a teacher who changed the direction of my life, and to whom I’m forever indebted.

A Phi Delta Kappa/Gallup poll released this week found that 76 percent of Americans believed that high-achieving high school students should later be recruited to become teachers, and 67 percent of respondents said that they would like to have a child of their own take up teaching in the public schools as a career.

But how do we expect to entice the best and brightest to become teachers when we keep tearing the profession down? We take the people who so desperately want to make a difference that they enter a field where they know that they’ll be overworked and underpaid, and we scapegoat them as the cause of a societywide failure.

A March report by the McGraw-Hill Research Foundation and the Organization for Economic Cooperation and Development found that one of the differences between the United States and countries with high-performing school systems was: “The teaching profession in the U.S. does not have the same high status as it once did, nor does it compare with the status teachers enjoy in the world’s best-performing economies.”

The report highlights two example of this diminished status:

• “According to a 2005 National Education Association report, nearly 50 percent of new teachers leave the profession within their first five years teaching; they cite poor working conditions and low pay as the chief reason.”

• “High school teachers in the U.S. work longer hours (approximately 50 hours, according to the N.E.A.), and yet the U.S. devotes a far lower proportion than the average O.E.C.D. country does to teacher salaries.”

Take Wisconsin, for instance, where a new law stripped teachers of collective bargaining rights and forced them to pay more for benefits. According to documents obtained by The Associated Press, “about twice as many public schoolteachers decided to hang it up in the first half of this year as in each of the past two full years.”

I’m not saying that we shouldn’t seek to reform our education system. We should, and we must. Nor am I saying that all teachers are great teachers. They aren’t. But let’s be honest: No profession is full of peak performers. At least this one is infused with nobility.

And we as parents, and as a society at large, must also acknowledge our shortcomings and the enormous hurdles that teachers must often clear to reach a child. Teachers may be the biggest in-school factor, but there are many out-of-school factors that weigh heavily on performance, like growing child poverty, hunger, homelessness, home and neighborhood instability, adult role-modeling and parental pressure and expectations.

The first teacher to clear those hurdles in my life was Mrs. Thomas.

From the first through third grades, I went to school in a neighboring town because it was the school where my mother got her first teaching job. I was not a great student. I was slipping in and out of depression from a tumultuous family life that included the recent divorce of my parents. I began to grow invisible. My teachers didn’t seem to see me nor I them. (To this day, I can’t remember any of their names.)

My work began to suffer so much that I was temporarily placed in the “slow” class. No one even talked to me about it. They just sent a note. I didn’t believe that I was slow, but I began to live down to their expectations.

When I entered the fourth grade, my mother got a teaching job in our hometown and I came back to my hometown school. I was placed in Mrs. Thomas’s class.

There I was, a little nothing of a boy, lost and slumped, flickering in and out of being.

She was a pint-sized firecracker of a woman, with short curly hair, big round glasses set wider than her face, and a thin slit of a mouth that she kept well-lined with red lipstick.

On the first day of class, she gave us a math quiz. Maybe it was the nervousness of being the “new kid,” but I quickly jotted down the answers and turned in the test — first.

“Whoa! That was quick. Blow, we’re going to call you Speedy Gonzales.” She said it with a broad approving smile, and the kind of eyes that warmed you on the inside.

She put her arm around me and pulled me close while she graded my paper with the other hand. I got a couple wrong, but most of them right.

I couldn’t remember a teacher ever smiling with approval, or putting their hand around me, or praising my performance in any way.

It was the first time that I felt a teacher cared about me, saw me or believed in me. It lit a fire in me. I never got a bad grade again. I figured that Mrs. Thomas would always be able to see me if I always shined. I always wanted to make her as proud of me as she seemed to be that day. And, she always was.

In high school, the district sent a man to test our I.Q.’s. Turns out that not only was I not slow, but mine and another boy’s I.Q. were high enough that they created a gifted-and-talented class just for the two of us with our own teacher who came to our school once a week. I went on to graduate as the valedictorian of my class.

And all of that was because of Mrs. Thomas, the firecracker of a teacher who first saw me and smiled with the smile that warmed me on the inside.

So to all of the Mrs. Thomases out there, all the teachers struggling to reach lost children like I was once, I just want to say thank you. You deserve our admiration, not our contempt.