Sen.Durbin Accuses For-Profit Corinthian College Of Defrauding Taxpayers

A top Senate Democrat has called for the Obama administration and collegiate accreditors to investigate whether a major for-profit college company, Corinthian Colleges Inc., systematically deceived students, government officials and taxpayers by inflating its job placement rates.

Citing a HuffPost investigation of Corinthian Colleges published this week, Sen. Dick Durbin of Illinois said the company's practices amounted to "an egregious misuse of taxpayer dollars."

"I write to ask the Department of Education to respond to these allegations and to spell out what, if any, direct authority the Department has to hold Corinthian accountable for this fraudulent behavior," Durbin wrote in a letter to U.S. Education Secretary Arne Duncan.

At for-profit institutions such as Corinthian's schools, job placement numbers are key both for recruiting new students and to satisfying non-profit accreditation agencies that certify the schools' standards. By meeting minimum placement goals for accreditors, Corinthian has been able to tap into federal student aid dollars totaling nearly $10 billion over the last decade -- more than 80 percent of the company's total revenue.

HuffPost drew on documents and interviews with former Corinthian career services employees in six states as part of its investigation into the company's job placement practices. These sources described a corporate culture that focused on hitting employment targets to satisfy accreditors, instead of finding quality jobs for graduates.

According to internal documents and a lawsuit from the California attorney general's office, at least three of Corinthian's Everest College campuses paid employers and a temp agency to hire students into short-term jobs as a way to boost placement numbers.

Other former employees told HuffPost that managers encouraged them to seek out employers with high turnover rates who were known to shuffle through Everest graduates. That arrangement allowed schools to place several students with the same employer over the course of a year. When a student was fired or quit due to poor conditions, according to former employees, Everest could send another graduate to the same workplace, driving up official placement rates.

Durbin sent letters this week to the Department of Education, Corinthian's two national accreditors and Corinthian's chief executive, Jack Massimino.

"You owe an explanation to your students, the public and the United States government," Durbin wrote in the letter to Massimino. "I ask that you provide an accurate accounting of how your graduates are placed in jobs in their field, the average tenure of these jobs, and any financial arrangements Corinthian has with these employers."

In an emailed response to questions, Corinthian spokesman Kent Jenkins said the allegations Durbin is referring to are "inaccurate," adding that "a number of national businesses hire dozens of our graduates every year." Jenkins said Corinthian has more than 750 career services employees, devoting far more resources to finding jobs for graduates than most community colleges.

Jenkins acknowledged that the company paid employers $2,000 to hire graduates at a campus in Decatur, Ga., during a "brief period" in 2011, but he said Corinthian discontinued the program and does not plan to use it again.

"If we find any evidence that company policy in this area has not been observed, we take decisive corrective action," Jenkins wrote.

Durbin called for Congress, the Department of Education and accreditors to end what he called a "corporate culture of deception and data manipulation."

"These deceptive practices give the illusion that this is a successful undertaking," Durbin said. "It turns out to be a charade."

Corinthian's Everest College established a Milwaukee campus in 2011 with the help of $11 million in interest free bonds from the city of Milwaukee. It closed its doors less than two years after it opened after it was discovered that its job placement rate was less than 6% and its drop-out rate more than 50%. 

For-profit colleges under attack for treatment of veterans

Government agencies scrutinize companies for saddling students with significant debt and inadequate degrees

By Gregory Karp, Chicago Tribune reporter

7:00 PM CST, January 22, 2012

For-profit colleges are coming under attack again, this time for allegedly preying on military veterans.

Sen. Dick Durbin, D.-Ill., is scheduled to hold a forum on the issue in Chicago Monday and plans to introduce legislation later in the day that would eliminate the financial incentive for-profit colleges have to recruit veterans aggressively into pricey programs. It would also require schools to get more of their revenue from sources other than the federal government's educational aid programs.

Criticism of for-profit schools has heated up in recent weeks. Last week, Illinois Attorney General Lisa Madigan sued Westwood College, claiming for-profit colleges mislead students enrolled in its criminal justice program, putting them deep in debt and saddling them with a nearly worthless degree for pursuing careers in Illinois law enforcement.

Earlier this month, shareholders sued Career Education Corp., a large for-profit college operator based in Schaumburg, claiming company officials misled investors about job placement rates for graduates, which led to a scandal and contributed to a lower stock price.

For-profit colleges are being scrutinized by Congress, the U.S. Department of Educationand the Justice Department for saddling students with crushing debt and questionable degrees that don't lead to jobs in their fields of study. Much of their revenue comes from federal grants and loans.

Military veterans are being aggressively recruited, critics claim, because of their lucrative forms of federal aid, such as GI Bill funds and Department of Defense tuition assistance benefits. That aid doesn't count toward the 90-10 rule, which bars for-profit colleges and universities from deriving more than 90 percent of their revenue from the Department of Education's federal student aid programs. The purpose of the rule is to ensure that for-profit schools, many of which are publicly held corporations, are not using taxpayer money as their sole source of revenue.

A Dec. 8 Senate committee report noted that educational benefits from the Veteran's Administration and the Department of Defense received by 20 for-profit education companies between 2006 and 2010 increased 683 percent, to more than a half-billion dollars.

Durbin will propose changing the rule to 85-15, meaning for-profit colleges would be limited to receiving 85 percent of their revenue from federal financial aid. Significantly, it would also count education aid for military personnel toward that 85 percent, eliminating the special incentive for career schools to recruit veterans.

Brian Moran, interim president of the Washington-based Association of Private Sector Colleges and Universities, which represents for-profits colleges, said in a statement that some legislators "have chosen to erect, rather than break down, the barriers to critical job-training and educational programs for veterans. Sen. Durbin's reported legislation on recruiting will only cut off access for thousands of veterans to the skill-intensive, hands-on programming and intensive job-placement support that veterans transitioning into the workplace need."

Those at American Military University, a provider of online education to active members of the military, contend schools like theirs are wrongfully lumped with schools using questionable tactics.

"No matter how well we're doing and how long we've been honorably serving the military, we get caught up in this because of the broad-brush strokes with this attack on the for-profit industry," said Jim Sweizer, vice president of military programs at American Military University, based in Charles Town, W.Va.

He added: "It's somewhat insulting that they don't give veterans the benefit of the doubt — these are intelligent people — and (they portray them as) being totally duped by a school."