A team of accreditors reviewing the University of Phoenix has recommended that the school be placed on probation, the university's parent said Monday, jeopardizing the reputation of the nation's largest for-profit college and its ability to collect federal student aid dollars crucial to the school's bottom line.
The University of Phoenix had a three-year default rate of more than 26 percent, according to the most recent federal data.
The Apollo Group, which owns the 319,000-student university, said in a filing with the Securities and Exchange Commission that a regional accreditation review team determined that the University of Phoenix had "insufficient autonomy" from its corporate parent -– a development that may prevent the university from achieving its "mission and successful operation."
The Apollo Group controls the leadership of the University of Phoenix board.
Apollo Group representatives said the company intends to appeal the recommendation.
The probation recommendation is not final. The board of the Higher Learning Commission, a Midwest college accrediting body, will likely make a final decision in June.
But the announcement signals that university accreditors are tightening reviews of for-profit colleges, which experienced explosive enrollment growth during the Great Recession as millions sought to improve their fortunes with a college degree.
All colleges must be accredited in order to remain eligible for federal student aid. Six regional accreditors collect fees from schools to consider them for approval, part of a peer-review process that dates back more than a century. Reviewers certify such things as academic courses and quality, and the accreditation standards are used in part to determine whether students can transfer credits from one institution to another.
Members of Congress in recent years have criticized the accreditation system as a rubber-stamp regulatory process that does little to protect taxpayer investments in higher education.
For-profit colleges such as the University of Phoenix get much of their revenue from federal aid programs, including subsidized student loans and Pell grants. The University of Phoenix last year received 84 percent of its revenue from federal financial aid programs, totaling more than $3.2 billion, according to company securities filings. The school's logo and advertisements can be seen on television commercials and highway billboards across the nation.
The for-profit college industry has come under fire in recent years, as the Obama administration, state attorneys general and lawmakers have questioned high tuition, low graduation rates and high rates of student loan defaults at many schools. More than 22 percent of students at for-profit colleges defaulted on federal loans within three years -- nearly twice the rate of students at public institutions, according to federal data.
Despite Phoenix's high default rates, plummeting enrollments, multiple government investigations, and intense media scrutiny the Apollo Group Inc., recently rewarded its retiring founder and CEO, John Sperling, what can only be characterized as a lavish retirement package. 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. 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.
In the past year, regional accreditors have cracked down on some for-profit institutions, including Ashford University, which in seven years morphed from a 300-student Catholic school in Iowa into a massive online institution serving nearly 90,000 students. Regional accreditors on the West Coast denied Ashford's bid for accreditation last year, arguing that the school had low graduation rates and was spending much more money on new student recruitment than educating current students.
The Higher Learning Commission has taken no formal action against the University of Phoenix. School officials said in the SEC filing on Monday that a review team found that the university's board was unable to "assure the university's integrity" and "make decisions necessary to achieve the institution's mission and successful operation."
The Apollo Group elects members of the University of Phoenix board of directors. The university's 11-member board includes four members who also serve on the parent company's board or senior leadership team.
If the Higher Learning Commission board decides to place the University of Phoenix on probation, the university would have up to two years to remedy problems. The school would remain accredited while on probation, meaning it would not be disqualified from receiving federal aid dollars.
Apollo Group executives mentioned the likelihood of negative findings from accreditors in a conference call with investors last month. The company wrote in Monday's public filing that if the school were placed on probation, its reputation "could be adversely affected, which in turn may negatively impact (the) ability to recruit and enroll students and to recruit and retain faculty and staff."
As the Obama administration and Congress have stepped up scrutiny of for-profit colleges, University of Phoenix enrollment dropped to 356,000 in August from more than 460,000 two years earlier, according to company securities filings. A quarterly filing last month said enrollment was 319,000.
Showing posts with label default rates. Show all posts
Showing posts with label default rates. Show all posts
Friday, March 1, 2013
Friday, February 24, 2012
Graduates of for-profits have higher default rates and lower earnings and employment than peers, study finds
Students attending for-profit colleges fare worse than similar students at community colleges and public and private nonprofit institutions, according to a new study reported on in the Chroncile of Higher Education.
Six years after they enter college, students from for-profit institutions are employed at lower rates and earn between $1800 and $2000 a year less than their peers.
For profit college students also have significantly higher default rates. Among students in the data set who had racked up between $5,000 and $10,000 in cumulative student-loan debt by 2009, 26 percent of those from for-profit colleges had defaulted, while 10 percent of those from community colleges and 7 percent of those from nonprofits had done so. As the level of debt increased to $20,000, the discrepancies grew wider: The default rate among for-profit-college students was 16 percent, compared with 3 percent for community-college students and 2 percent for those from four-year colleges.
The study is linked here.
Six years after they enter college, students from for-profit institutions are employed at lower rates and earn between $1800 and $2000 a year less than their peers.
For profit college students also have significantly higher default rates. Among students in the data set who had racked up between $5,000 and $10,000 in cumulative student-loan debt by 2009, 26 percent of those from for-profit colleges had defaulted, while 10 percent of those from community colleges and 7 percent of those from nonprofits had done so. As the level of debt increased to $20,000, the discrepancies grew wider: The default rate among for-profit-college students was 16 percent, compared with 3 percent for community-college students and 2 percent for those from four-year colleges.
The study is linked here.
Thursday, September 16, 2010
Student-Loan Defaults rise; Momemtum for Gainful Employment rule grows
The Chroncile of Higher Education's Kelly Fields reports:
The percentage of borrowers defaulting on their student loans has risen for a third year in a row, reaching an 11-year high of 7 percent, according to U.S. Education Department data released on Monday.
As usual, the "cohort default rate" for 2008, the most recent data available, is highest at for-profit colleges, averaging 11.6 percent, a 0.6-percent increase over the previous year. The rate for public colleges is 6 percent, up from 5.9 percent. For private colleges, the rate is 4 percent, up from 3.7 percent.
The numbers represent the share of students who entered repayment in the 2008 fiscal year and defaulted by the end of last September.
In a news release, Education Department officials used the data to make their case for a crackdown on for-profit colleges. This past summer the department issued a package of proposed rules aimed at protecting students and taxpayers from the consequences of student-loan defaults, particularly at proprietary institutions. Final rules are due by November 1.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," Secretary of Education Arne Duncan said in the news release. "Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Lobbyists for for-profit colleges say the recent rise in defaults is a reflection of the weak economy, not the quality of their institutions. In a news release, the Career College Association argued that default rates should not be used "as a proxy on the value of our schools or the education we provide."
"In a climate marked by near double-digit unemployment, it is not surprising that former students continue to find it more difficult to repay their student loans," said Harris N. Miller, the association's president.
Under federal rules, colleges with default rates greater than 25 percent for three consecutive years, or 40 percent for a single year, can lose their eligibility to award federal student aid.
This year two colleges exceeded the first cap: the Charleston School of Beauty Culture, in Charleston, W.Va., and Human Resource Development & Employment-Stanley Technical Institute, in Clarksburg, W.Va. Three colleges had rates of greater than 40 percent: Cuttin' Up Beauty Academy, in Denver; Academy of Healing Arts, in Las Vegas; and Clinton Junior College, in Rock Hill, S.C.
Monday's data release fell less than a week after the end of a public-comment period on the most controversial of the department's proposals designed to protect students and taxpayers, known as the "gainful employment" rule. The department received close to 85,000 comments on that rule, which would cut off aid to programs whose students have the highest debt burdens and lowest loan-repayment rates. For-profit colleges say the rule would ravage their revenues and force them to close thousands of programs serving low-income and minority students.
The government's annual cohort default rate is a snapshot in time, reflecting the share of students who default on their loans within two years of leaving college. As such, the data capture only a sliver of the defaults that occur over the life of a loan, a recent Chronicle analysis found. According to that analysis, one in every five government loans that entered repayment in 1995 has gone into default.
The percentage of borrowers defaulting on their student loans has risen for a third year in a row, reaching an 11-year high of 7 percent, according to U.S. Education Department data released on Monday.
As usual, the "cohort default rate" for 2008, the most recent data available, is highest at for-profit colleges, averaging 11.6 percent, a 0.6-percent increase over the previous year. The rate for public colleges is 6 percent, up from 5.9 percent. For private colleges, the rate is 4 percent, up from 3.7 percent.
The numbers represent the share of students who entered repayment in the 2008 fiscal year and defaulted by the end of last September.
In a news release, Education Department officials used the data to make their case for a crackdown on for-profit colleges. This past summer the department issued a package of proposed rules aimed at protecting students and taxpayers from the consequences of student-loan defaults, particularly at proprietary institutions. Final rules are due by November 1.
"While for-profit schools have profited and prospered thanks to federal dollars, some of their students have not," Secretary of Education Arne Duncan said in the news release. "Far too many for-profit schools are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use."
Lobbyists for for-profit colleges say the recent rise in defaults is a reflection of the weak economy, not the quality of their institutions. In a news release, the Career College Association argued that default rates should not be used "as a proxy on the value of our schools or the education we provide."
"In a climate marked by near double-digit unemployment, it is not surprising that former students continue to find it more difficult to repay their student loans," said Harris N. Miller, the association's president.
Under federal rules, colleges with default rates greater than 25 percent for three consecutive years, or 40 percent for a single year, can lose their eligibility to award federal student aid.
This year two colleges exceeded the first cap: the Charleston School of Beauty Culture, in Charleston, W.Va., and Human Resource Development & Employment-Stanley Technical Institute, in Clarksburg, W.Va. Three colleges had rates of greater than 40 percent: Cuttin' Up Beauty Academy, in Denver; Academy of Healing Arts, in Las Vegas; and Clinton Junior College, in Rock Hill, S.C.
Monday's data release fell less than a week after the end of a public-comment period on the most controversial of the department's proposals designed to protect students and taxpayers, known as the "gainful employment" rule. The department received close to 85,000 comments on that rule, which would cut off aid to programs whose students have the highest debt burdens and lowest loan-repayment rates. For-profit colleges say the rule would ravage their revenues and force them to close thousands of programs serving low-income and minority students.
The government's annual cohort default rate is a snapshot in time, reflecting the share of students who default on their loans within two years of leaving college. As such, the data capture only a sliver of the defaults that occur over the life of a loan, a recent Chronicle analysis found. According to that analysis, one in every five government loans that entered repayment in 1995 has gone into default.
Thursday, August 26, 2010
Corinthian College's shares tumble in response to default rates
Corinthian College's technical college subsidiary, Everest College, will open its new Milwaukee campus in October one block north of the Milwaukee Area Technical College's flagship downtown campus.
This should be good news for Corinthian's stockholders. But last week, shares of Corinthian fell precipitously after Corinthian Colleges Inc. said its already low student loan repayment rates were deteriorating, putting it at risk of losing access to federal financial aid for some programs, its main revenue source.
The Department of Education (DOE) can suspend a school's access to federal financial aid if the default rate is 25 percent or greater for three years in a row. That aid makes up the bulk of Corinthian and other for-profit education companies' revenue.
The DOE study released last Friday showed Corinthian students repay loans at one of the lowest rates among those who attend publicly traded companies' schools. Everest College students had a repayment rate of only 19.2%. The proposed federal regulation would establish a repayment rate standard of 45%.
None of Corinthian's 88 Everest campuses met that standard and eight were below 10%
Corinthian offered a first-quarter forecast Friday that fell below analyst expectations and said it was unable to forecast its fiscal 2011 performance because of uncertainty about the impacts of regulatory changes and its decision to limit student enrollments to improve graduation and loan repayment rates.
Its shares tumbled 86 cents, or 16 percent, to $4.54 in Friday afternoon trading. The stock, which has lost two-thirds of its value in 2010, had not traded below $5 between August 2000 and this week.
Corinthian's bad news pulled down other stock in other for-profit education companies, many of which have made changes to accommodate new regulation and lawmakers' concerns.
For-profit education companies' shares have fallen this year as regulators and lawmakers, led by Senator Tom Harkin, address soaring student loan defaults, aggressive and often fraudulent recruiting by enrollment counselors and concerns about the quality of education the companies provide.
Corinthian expects that the number of its schools with student loan default rates above 25 percent will be "substantially higher" for students beginning to pay in 2009 fiscal year than for the 2008 group. Up to three of the company's schools could become ineligible with the 2009 data, joining 49 already ineligible, Corinthian said.
The company also said it is stopping enrollment of students more likely to default on loans and drop out, who make up 15 percent of its student population. Corinthian expects this change to result in flat new student growth for the year, down substantially from the double-digit growth of the last few years.
Several companies have cut their outlooks when reporting quarterly results recently, saying regulatory changes and efforts to improve the school experience for students will slow enrollments.
The sector's biggest decliners were Education Management Corp. which is also opening a Milwaukee campus, The Arts Institute in the Third Ward, and Lincoln Educational Services, which both tumbled 5 percent.
DeVry Inc., ITT Educational Services Inc. and Career Education Corp. slid about 4 percent.Bridgepoint Education Inc. fell 3 percent, while Strayer Education Inc., Capella Education Co. and Grand Canyon Education Inc. all shed about 1 percent.
Apollo Group Inc., which owns the largest school chain in the country, the University of Phoenix, fell 18 cents to $40.41.
This should be good news for Corinthian's stockholders. But last week, shares of Corinthian fell precipitously after Corinthian Colleges Inc. said its already low student loan repayment rates were deteriorating, putting it at risk of losing access to federal financial aid for some programs, its main revenue source.
The Department of Education (DOE) can suspend a school's access to federal financial aid if the default rate is 25 percent or greater for three years in a row. That aid makes up the bulk of Corinthian and other for-profit education companies' revenue.
The DOE study released last Friday showed Corinthian students repay loans at one of the lowest rates among those who attend publicly traded companies' schools. Everest College students had a repayment rate of only 19.2%. The proposed federal regulation would establish a repayment rate standard of 45%.
None of Corinthian's 88 Everest campuses met that standard and eight were below 10%
Corinthian offered a first-quarter forecast Friday that fell below analyst expectations and said it was unable to forecast its fiscal 2011 performance because of uncertainty about the impacts of regulatory changes and its decision to limit student enrollments to improve graduation and loan repayment rates.
Its shares tumbled 86 cents, or 16 percent, to $4.54 in Friday afternoon trading. The stock, which has lost two-thirds of its value in 2010, had not traded below $5 between August 2000 and this week.
Corinthian's bad news pulled down other stock in other for-profit education companies, many of which have made changes to accommodate new regulation and lawmakers' concerns.
For-profit education companies' shares have fallen this year as regulators and lawmakers, led by Senator Tom Harkin, address soaring student loan defaults, aggressive and often fraudulent recruiting by enrollment counselors and concerns about the quality of education the companies provide.
Corinthian expects that the number of its schools with student loan default rates above 25 percent will be "substantially higher" for students beginning to pay in 2009 fiscal year than for the 2008 group. Up to three of the company's schools could become ineligible with the 2009 data, joining 49 already ineligible, Corinthian said.
The company also said it is stopping enrollment of students more likely to default on loans and drop out, who make up 15 percent of its student population. Corinthian expects this change to result in flat new student growth for the year, down substantially from the double-digit growth of the last few years.
Several companies have cut their outlooks when reporting quarterly results recently, saying regulatory changes and efforts to improve the school experience for students will slow enrollments.
The sector's biggest decliners were Education Management Corp. which is also opening a Milwaukee campus, The Arts Institute in the Third Ward, and Lincoln Educational Services, which both tumbled 5 percent.
DeVry Inc., ITT Educational Services Inc. and Career Education Corp. slid about 4 percent.Bridgepoint Education Inc. fell 3 percent, while Strayer Education Inc., Capella Education Co. and Grand Canyon Education Inc. all shed about 1 percent.
Apollo Group Inc., which owns the largest school chain in the country, the University of Phoenix, fell 18 cents to $40.41.
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.
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?
Saturday, March 13, 2010
Who will clean up after Corinthian College?
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 across the street from Milwaukee Area Technical College (MATC) and on the doorstep of 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.
Whatever happened to their responsibility to serve and protect the public?
Is DCD really so desperate for investment that they 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.
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.
Whatever happened to their responsibility to serve and protect the public?
Is DCD really so desperate for investment that they 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?
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