Devry University accused of violating federal laws

A lawsuit filed this month in San Diego, Calif. alleges DeVry University Inc. leadership in the city bribed students and sought ways to work around federal laws meant to regulate for-profit colleges.

Attorneys for Karinna Topete, a former manager at DeVry in California, claim she witnessed school officials violating internal company policies, as well as state and federal laws and regulations and that she was a victim of sexual harassment.

The lawsuit argues the DeVry campus' leadership would issue bonuses to admissions counselors who exceeded enrollment quotas, and that officials would "bribe" students -- in one instance, providing gift cards -- in exchange for positive performance reviews from students, according to court documents.

For-profit colleges have been increasingly regulated by the Obama administration in an attempt to reform the "bad actors."

 Recent investigations by the U.S. Senate and Government Accountability Office found widespread deceptive recruiting practices by many of the largest for-profit schools. In 2012, Sen. Tom Harkin (D-Iowa) listed DeVry along with other schools as companies that had "very serious shortcomings in the past" but are making improvements.

Topete alleges DeVry officials sought to evade federal regulations by sending admissions employees to community college transfer fairs to pressure enrolled students to sign up for classes at the for-profit institute. She also claims in the lawsuit that the DeVry Director of Admissions ordered her not to provide "informational materials or referrals to persons of Iraqi national origin or Middle-Eastern appearance."

According to the U.S. Department of Education, DeVry received just shy of $1.3 billion in taxpayer dollars through federal student aid in 2010-11, the most recent year data is available.

University of Phoenix CEO gets lavish retirement package

For more than a decade public school teachers and college and university faculty have been demonized for negotiating modest pensions and retirement benefits even as private sector CEO's walked away with multi-million dollar retirement packages and funding for public education and higher education was slashed.

Now the Apollo Group Inc., owner of the University of Phoenix, the nation's largest for-profit college, has given its retiring founder and CEO, John Sperling, what can only be characterized as a lavish retirement package despite declining student enrollment, multiple government investigations, and intense media scrutiny.

Sperling, who retired at the end of 2012 and now holds the title of chairman emeritus, will receive a $5 million “special retirement bonus” this month, according to a securities filing Thursday, spotted by Footnoted’s Michelle Leder. He also gets a lifetime annuity—$70,833.33 a month— and ownership of the two company vehicles he used when serving as executive chairman. Apollo will also cover “reasonable out-of-pocket” medical- and dental-care coverage the 92-year-old incurs for the rest of his life. 

Sperling's retirement package defines nepotism. Apollo's board chairman is John Sperling’s son, Peter Sperling. 

It isn't as if the elder Sperling was underpaid. He received total compensation valued at $6.95 million in fiscal 2012, including salary, options and non-equity incentive pay, according to an earlier securities filing.

A Senate committee chaired by Senator Tom Harkin of Iowa has criticized the costs of for-profit colleges like University of Phoenix, arguing that too small a share of the taxpayer-funded loans on which the schools rely for most of their funding is being allocated to instruction and academic support and that their graduation and job placement rates are abysmally low. More than 90% of University of Phoenix’s net revenue in fiscal 2012 came from Title IV federal financial aid programs. For-profit colleges are notorious for investing more in marketing and recruitment than in education.

Nor can Sperling's exorbitant taxpayer funded retirement be justified by the University of Phoenix's financial performance or enrollments. Apollo lost nearly two-thirds of its market value in the past year, and on Jan 8 it reported  that its fiscal first-quarter revenue had fallen nearly 10% to $1.06 billion as enrollment tumbled by more than 14%.

That doesn't mean that the Sperling's aren't fighting back.

The school rolled out a new marketing campaign last year to stress its offerings of practical, career-oriented courses. And earlier this week, WSJ reported, it unveiled an executive-education course on innovation, taught by top business-school faculty, as part of an effort to tap into the corporate-training market and diversify beyond its shrinking University of Phoenix revenue stream.

To be sure, Sperling isn’t alone in getting cushy compensation upon retirement. The WSJ’s Joann Lublin wrote in November about some of the more generous consulting agreements for ex-executives at companies including IBM, First Cash Financial Services Inc. and elsewhere. Some, Lublin reported, even struck deals to get paid after their death.  That doesn't appear to be part of Sperling's deal. But unlike the students who the University of Phoenix has preyed on and left with little more than shattered dreams and mountains of debt, John Sperling will have nothing to worry about for the rest of his life.

This blog is based on an article in the Wall Street Journal entitled "University of Phoenix retirement plan: nice work if you can get it" by Melissa Korn.

University of Phoenix placed "on notice" by accreditors

The University of Phoenix expects to be placed "on notice" by its regional accreditor, the Higher Learning Commission of the North Central Association. The commission recently conducted a comprehensive review of the university, and an official with the Apollo Group, which owns Phoenix, told investors last week that the commission had said it would soon issue a report identifying "several areas of concern" that arose from the review. Placing the university on notice is less serious than probation. Phoenix would have up to two years to correct issues that could affect its accreditation status.

Students, Teachers Protest Closing of Sawyer Schools

 

NBC Connecticut reports that students and teachers are protesting the abrupt closure of Sawyer schools.

Students and teachers gathered outside the Sawyer School in Hartford on Wednesday morning, angry over the school’s sudden closure during holiday break.

Students and teachers are frustrated with the lack of answers coming from Academic Enterprises, Inc., the Rhode Island company that runs the Sawyer Schools in both Hartford and Hamden, as well as the Butler Business School in Bridgeport, all of which have shut their doors, kicking a total of 1,200 students out of class.

“I was ready to graduate and then they closed the school,” complained Charlene Brimage, who was trying to get her degree in business.

“I was three classes away from going out on externship and graduating in April,” Arelis Quinones said.

“Our schedules were already out. We were already scheduled for classes,” Don Lanier, an instructor, said.

Some students received a letter telling them class was out permanently, while others heard through social media.

The instructors, including Lanier, received a call from their supervisor over the holidays reporting that classes would not resume this week as scheduled.

“We have no answers about anything,” Lanier said.

The Office of Higher Education addressed the abrupt closing in a statement saying they “received a brief email on December 30, 2012 from Academic Enterprises Inc., stating that the schools have 'suspended' operations.'"

The statement also urges students impacted by the closure to contact the Office of Higher Education for assistance.

"We encourage all impacted students to register with our office so that we may learn of their status and help answer their questions about finishing their coursework and obtaining potential tuition reimbursements,” said Jane A. Ciarlegio, executive director of the Office of Higher Education.

Connecticut General Statutes prescribe procedures for schools to follow in the event of closing. Schools are required to notify the Office of Higher Education at least 60 days before closing. The notification gives agency officials time to work with school representatives to assure an orderly transition and cessation of business. Both Sawyer Schools and the Butler Business School allegedly violated this requirement.

How the schools will be punished, if at all, following the state’s investigation, remains to be seen.

More for-profits close abruptly-Connecticut launches investigation

The Hartford Courant's William Weir reports:

Connecticut state officials are investigating why three for profit schools that offer occupational training closed abruptly over the weekend, and are looking into how the more than 1,200 students may continue their education.

Students at the two Sawyer Schools, in Hartford and Hamden, and at the Butler Business School in Bridgeport learned in recent days that all three schools, which are owned by Academic Enterprises Inc., had ceased operations. Classes were scheduled to resume Thursday. Officials at the state Office of Higher Education learned of the closings Monday when they saw an email sent Sunday informing them of the move.

Paul Kelly, president of Sawyer School, wrote to Patricia Santoro, director of academic affairs at the Office of Higher Education: "I regret to inform you that the School's board has directed that the Sawyer Schools and Butler Business School suspend operations. Classes scheduled to begin in January have been cancelled, and students, faculty and staff have been notified. "I have requested assistance from each of the school's landlords to provide for an orderly transition of student records. In the coming week, I hope to work with you to facilitate this process, and any other options that may be available to help our students continue their education at another institution."

Constance Fraser, a spokeswoman for the state Office of Higher Education, said the lack of notice directly goes against state regulations, which require at least 60 days' notice. "These things can happen, but there are standards and regulations that schools should follow," she said Monday. "That didn't happen in this case."

The three schools offer career training, specializing in clerical skills and medical assistance. The Butler Business School, founded in 1900, had 415 students. The Sawyer School was founded in 1916; 461 students were enrolled at its Hartford campus and 339 were enrolled in Hamden.

U.S. Sen. Richard Blumenthal on Monday sent a letter to Academic Enterprises, asking for assurances that students will be reimbursed for tuition paid or arrange for them to continue their studies elsewhere at no additional cost.. "The schools' notice [provides] no indication of whether hundreds of current students would receive a refund for tuition already paid toward certificate programs now terminated without any explanation," he wrote.

Blumenthal also wrote that he was "very troubled" by the closings and Academic Enterprises' "silence" about them. "The prospect of this sudden, potentially damaging closure — with losses in funds and education opportunities to hundreds of students and the federal government — strongly suggests the need for further investigation."

Fraser said that many of the students were weeks away from graduating. "The next step is that we are urging students to call our information center," she said, adding that the office will also have a website up advising students on where to go for assistance. "We are working with the office of the attorney general, school officials and the Association of Private Occupational Schools," she said. "We are exploring why this happened, but first and foremost, what's the best avenue we have for helping students?"

Academic Enterprises Inc., based in Rhode Island, purchased the Sawyer School in 1975 and purchased Butler in 1999.

Students of the schools are asked to call the state at 800-842-0229 and to consult the website at http://www.ctohe.org/.