The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Development Management Corporation (EDMC), the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.
An EDMC subsidiary,the Art Institute of Wisconsin, recently began operations in Milwaukee's Third Ward, in close proximity to the Milwaukee Institute of Art and Design (MIAD). It is one of several for-profit colleges, including the notorious Everest College, that have recently opened branches in the city.
The Art Institute of Wisconsin anchored a controversial development that received $6.5 million in federal New Market tax credits from the Milwaukee Economic Development Corporation. I had written a letter in opposition to subsidizing this development with New Market tax credits because they are designed to promote development in poor communities, not gentrified areas like the Third Ward, and because of the large number of lawsuits against EDMC alleging unscrupulous business practices.
While the civil lawsuit filed earlier this week is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.
“The depth and breadth of the fraud laid out in the complaint are astonishing,” said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit. “It spans the entire company — from the ground level in over 100 separate institutions up to the most senior management — and accounts for nearly all the revenues the company has realized since 2003.”
Education Management, which is based in Pittsburgh and is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools operating under four names: Art Institute, Argosy University, Brown Mackie College and South University.
For more information go to this link.
Showing posts with label Art Institute of Wisconsin. Show all posts
Showing posts with label Art Institute of Wisconsin. Show all posts
Thursday, August 11, 2011
Wednesday, May 11, 2011
Faculty at For-Profits Allege Constant Pressure to Keep Students Enrolled
The Chronicle of Higher Education reports that faculty at for-profits colleges are under constant pressure to keep students enrolled.
Faculty report that they were pressured to ignore plagiarism and inflate grades to keep enrollments high and federal funds, the source of up to 90% of for-profit college revenues, flowing. Not surprisingly Corinthian College's trade school, Everest College, and the Educational Development Management Corporation's (EDMC) Art Institutes are two of the diploma mills whose practices are scrutinized in this front page expose. Both recently opened operations in Milwaukee.
Kelly Field writes:
In interviews with The Chronicle and lawsuits filed around the country, more than a dozen current and former professors from six of the seven largest publicly traded education companies say they were leaned on to dumb down courses, offer lengthy extensions, and change failing grades. They describe a system in which expectations are low, cheating is tolerated, and faculty are under tremendous pressure to keep students enrolled.
"We were supposed to keep students in the classroom by any means necessary," says Luccia Rogers, a former professor at Career Education Corporation's Collins College, who says the college fudged grades and forgave repeated plagiarism—claims that the college denies. "It was all about keeping people in the seats to keep the federal money coming in."
In interviews with The Chronicle, current and former professors from a wide range of for-profit colleges said they were pressured—and in some cases ordered—to offer extensions, forgive plagiarism, and inflate grades to keep students enrolled and the federal aid flowing.
Kate M. Burkes, who has taught online courses for the University of Phoenix, said plagiarism is widespread at the college. She said she reported one student for plagiarism seven times.
Faculty complaints about grade changes are widespread in the for-profit sector. In recent years, faculty members from several for-profit colleges have filed lawsuits alleging that they had been fired after reporting altered grades or refusing to raise grades. Two such lawsuits are pending against ITT Educational Services, which paid $725,000 to California in 2005 to reimburse the state for Cal Grants awarded to academically ineligible students. The payment settled the state's portion of a lawsuit filed by two former employees that accused the company of falsifying grades to qualify the students for the grants, a claim the company denied.
At some for-profit companies, the link between faculty compensation and retention is explicit. The American Public University System pays adjunct faculty members by the student rather than the course, offering $130 per student in undergraduate courses and $150 per student in graduate courses. But students must complete 60 percent of the class for the faculty member to receive the full amount; if a student drops the course before then, the professor gets only 45 percent of the fee, or $58.50 for an undergraduate. Full-time faculty, which make up a quarter of the total, receive a salary.
At Everest College Phoenix online, 15 percent of a professor's evaluation is based on his or her efforts to track down absent and at-risk students to offer "assistance and encouragement."
Some campuses of Heald College base 20 percent of each faculty evaluation on "student outcomes," a category that takes into account student surveys as well as retention and pass rates. The target rate for each is 85 percent, according to Ayn Embar-Seddon O'Reilly, an instructor who has taught online courses for both Everest College Phoenix and Heald. She says professors with high retention and pass rates are rewarded with pay raises and additional classes.
Both colleges are owned by Corinthian Colleges Inc, which enrolls 102,000 students at 120 campuses in the United States and Canada.
The entire expose is linked here.
Faculty report that they were pressured to ignore plagiarism and inflate grades to keep enrollments high and federal funds, the source of up to 90% of for-profit college revenues, flowing. Not surprisingly Corinthian College's trade school, Everest College, and the Educational Development Management Corporation's (EDMC) Art Institutes are two of the diploma mills whose practices are scrutinized in this front page expose. Both recently opened operations in Milwaukee.
Kelly Field writes:
In interviews with The Chronicle and lawsuits filed around the country, more than a dozen current and former professors from six of the seven largest publicly traded education companies say they were leaned on to dumb down courses, offer lengthy extensions, and change failing grades. They describe a system in which expectations are low, cheating is tolerated, and faculty are under tremendous pressure to keep students enrolled.
"We were supposed to keep students in the classroom by any means necessary," says Luccia Rogers, a former professor at Career Education Corporation's Collins College, who says the college fudged grades and forgave repeated plagiarism—claims that the college denies. "It was all about keeping people in the seats to keep the federal money coming in."
In interviews with The Chronicle, current and former professors from a wide range of for-profit colleges said they were pressured—and in some cases ordered—to offer extensions, forgive plagiarism, and inflate grades to keep students enrolled and the federal aid flowing.
Kate M. Burkes, who has taught online courses for the University of Phoenix, said plagiarism is widespread at the college. She said she reported one student for plagiarism seven times.
Faculty complaints about grade changes are widespread in the for-profit sector. In recent years, faculty members from several for-profit colleges have filed lawsuits alleging that they had been fired after reporting altered grades or refusing to raise grades. Two such lawsuits are pending against ITT Educational Services, which paid $725,000 to California in 2005 to reimburse the state for Cal Grants awarded to academically ineligible students. The payment settled the state's portion of a lawsuit filed by two former employees that accused the company of falsifying grades to qualify the students for the grants, a claim the company denied.
At some for-profit companies, the link between faculty compensation and retention is explicit. The American Public University System pays adjunct faculty members by the student rather than the course, offering $130 per student in undergraduate courses and $150 per student in graduate courses. But students must complete 60 percent of the class for the faculty member to receive the full amount; if a student drops the course before then, the professor gets only 45 percent of the fee, or $58.50 for an undergraduate. Full-time faculty, which make up a quarter of the total, receive a salary.
At Everest College Phoenix online, 15 percent of a professor's evaluation is based on his or her efforts to track down absent and at-risk students to offer "assistance and encouragement."
Some campuses of Heald College base 20 percent of each faculty evaluation on "student outcomes," a category that takes into account student surveys as well as retention and pass rates. The target rate for each is 85 percent, according to Ayn Embar-Seddon O'Reilly, an instructor who has taught online courses for both Everest College Phoenix and Heald. She says professors with high retention and pass rates are rewarded with pay raises and additional classes.
Both colleges are owned by Corinthian Colleges Inc, which enrolls 102,000 students at 120 campuses in the United States and Canada.
The entire expose is linked here.
Tuesday, May 3, 2011
U.S. to Join Suit Against For-Profit College Chain
The Justice Department plans to intervene in a whistle-blower lawsuit charging that one of the nation’s largest for-profit college companies, the Education Management Corporation (EDMC), defrauded the government by illegally paying recruiters based on the number of students they enrolled, according to a Securities and Exchange Commission filing on Monday.
An EDMC affiliated college, the Art Institute of Wisconsin, recently began operations in Milwaukee's Third Ward, in close proximity to the Milwaukee Institute of Art and Design (MIAD). It is one of several for-profit colleges, including Everest College, that have recently opened branches in the city.
The Art Institute anchored a controversial development that received $6.5 million in federal New Market tax credits from the Milwaukee Economic Development Corporation. I had written a letter in opposition to subsidizing this development with New Market tax credits because they are designed to promote development in poor communities, not gentrified areas like the Third Ward, and because of the large number of lawsuits against EDMC alleging unscrupulous business practices.
The Security and Exchange Commission filing by Education Management, known as EDMC, said “several states” also planned to join in the False Claims Act case, in federal court in Pittsburgh, alleging violations of their state laws.
According to the New York Times' Tamar Lewin:
This is the first time prosecutors have joined such a case, one of dozens in recent years that accuse the for-profit college industry of illegal practices devised to increase federal student aid revenue.
The company, which enrolls nearly 150,000 students, operates several career-college chains, including the Art Institute, Argosy University, Brown Mackie College and South University.
EDMC, 40 percent of which is owned by Goldman Sachs, said in its securities filing that its compensation plan for recruiters did not violate the law, and that it would “vigorously defend itself.”
In federal whistle-blower, or qui tam, suits filed under the False Claims Act, private citizens file fraud complaints on behalf of the federal government, seeking to recover public money that was wrongly paid out. The lawsuits are filed under seal, giving the government an opportunity to investigate and decide whether to intervene, so the one against EDMC has yet to be made public.
Some such suits have been settled for significant amounts of money. In 2009, Apollo Group, which operates the University of Phoenix, the largest chain of for-profit colleges, agreed to pay $78.5 million to settle one.
For-profit schools enroll about 12 percent of the nation’s higher-education students yet receive about a quarter of all federal student aid; their students account for almost half of all defaults. In general, these institutions get more than 80 percent of their revenues from federal student aid.
The United States Department of Education and Senator Tom Harkin, an Iowa Democrat who is the chairman of the Health, Education, Labor and Pensions Committee, have become concerned in recent years that such colleges too often leave their students with mountains of debt and no marketable job skills.
The Education Department has taken action to rein in abuses by the for-profit sector but has so far delayed the most controversial regulation it has proposed, the “gainful employment” rule that would cut off federal aid to programs whose graduates have high debt loads and not enough income to pay them.
The for-profit schools are lobbying intensely against the rule, and last week more than 100 members of Congress wrote to President Obama asking that his administration drop the gainful employment rule, which they say would cut off access to higher education for many poor minority students.
Supporters of the rule say it would not harm poor students but rather protect them from taking out large loans to enroll in expensive programs that would not lead to good jobs.
An EDMC affiliated college, the Art Institute of Wisconsin, recently began operations in Milwaukee's Third Ward, in close proximity to the Milwaukee Institute of Art and Design (MIAD). It is one of several for-profit colleges, including Everest College, that have recently opened branches in the city.
The Art Institute anchored a controversial development that received $6.5 million in federal New Market tax credits from the Milwaukee Economic Development Corporation. I had written a letter in opposition to subsidizing this development with New Market tax credits because they are designed to promote development in poor communities, not gentrified areas like the Third Ward, and because of the large number of lawsuits against EDMC alleging unscrupulous business practices.
The Security and Exchange Commission filing by Education Management, known as EDMC, said “several states” also planned to join in the False Claims Act case, in federal court in Pittsburgh, alleging violations of their state laws.
According to the New York Times' Tamar Lewin:
This is the first time prosecutors have joined such a case, one of dozens in recent years that accuse the for-profit college industry of illegal practices devised to increase federal student aid revenue.
The company, which enrolls nearly 150,000 students, operates several career-college chains, including the Art Institute, Argosy University, Brown Mackie College and South University.
EDMC, 40 percent of which is owned by Goldman Sachs, said in its securities filing that its compensation plan for recruiters did not violate the law, and that it would “vigorously defend itself.”
In federal whistle-blower, or qui tam, suits filed under the False Claims Act, private citizens file fraud complaints on behalf of the federal government, seeking to recover public money that was wrongly paid out. The lawsuits are filed under seal, giving the government an opportunity to investigate and decide whether to intervene, so the one against EDMC has yet to be made public.
Some such suits have been settled for significant amounts of money. In 2009, Apollo Group, which operates the University of Phoenix, the largest chain of for-profit colleges, agreed to pay $78.5 million to settle one.
For-profit schools enroll about 12 percent of the nation’s higher-education students yet receive about a quarter of all federal student aid; their students account for almost half of all defaults. In general, these institutions get more than 80 percent of their revenues from federal student aid.
The United States Department of Education and Senator Tom Harkin, an Iowa Democrat who is the chairman of the Health, Education, Labor and Pensions Committee, have become concerned in recent years that such colleges too often leave their students with mountains of debt and no marketable job skills.
The Education Department has taken action to rein in abuses by the for-profit sector but has so far delayed the most controversial regulation it has proposed, the “gainful employment” rule that would cut off federal aid to programs whose graduates have high debt loads and not enough income to pay them.
The for-profit schools are lobbying intensely against the rule, and last week more than 100 members of Congress wrote to President Obama asking that his administration drop the gainful employment rule, which they say would cut off access to higher education for many poor minority students.
Supporters of the rule say it would not harm poor students but rather protect them from taking out large loans to enroll in expensive programs that would not lead to good jobs.
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