For-Profit College Claims Are 'Nonsense,' Obama Administration Says

By Chris Kirkham for the Huffington Post 9/10/12

For-profit college representatives say they shouldn't have to tell prospective students whether they are likely to afford their debts after attending school, arguing the disclosures wouldn't be helpful.
But the Department of Education says this is "nonsense," according to a filing last week, the latest round in a federal court battle between the Obama administration and a key for-profit college trade group.

At issue are rules that would require for-profit colleges to disclose statistics on how students cope with their debts after graduating or dropping out of school. The data would indicate how many students are repaying loans, and how their loan debts will compare to earnings after graduation.

For nearly three years, the administration has attempted to rein in abuses at for-profit institutions that leave students with huge debts and few job prospects. Because the industry gets most of its revenue from the federal government, in the form of Pell grants and student loans, the Department of Education has tried to gauge whether such schools are preparing students for careers that will allow them to repay debts.

In a federal court filing last month, the Association of Private Sector Colleges and Universities (APSCU) argued that the student debt disclosures would not provide "any meaningful information to prospective students."

Last week, the Department of Education replied: "Plaintiff's assertion that… information on a program's repayment rate and debt-to-income ratios will not be meaningful to students, is nonsense."
The department went on to say the measurements provide "valuable information that many – if not all – prospective students considering whether to enroll in a program would like to have."

The disclosures could cast many for-profit colleges in a negative light. According to preliminary data released by the Department of Education this summer, many for-profit colleges fared poorly on the student debt measurements. Nearly two-thirds of all programs failed to meet expectations in at least one of three tests.

Read the entire article here.

One More Term-A Political Parody

Ryan's speech: ducked the tough issues and blamed others for the problems.

The party that claims to have all the answers on Medicare seemed to have no interest in sharing them with the American people at its convention on Wednesday. The session, devoted to the theme of “We Can Change It,” never went any deeper than that slogan or a few others: Reform Medicare. Strengthen Medicare. Protect Medicare.

 

All without the slightest hint of how that supposed reform or strengthening would take place, regarding that program and many others. “We will not duck the tough issues; we will lead,” said Representative Paul Ryan, in his speech accepting the vice-presidential nomination. “We will not spend four years blaming others; we will take responsibility.”

 

Sounds great, except that the speech ducked the tough issues and blamed others for the problems.

Mr. Ryan, who rose to prominence on the Republican barricades with a plan to turn Medicare into a voucher system, never uttered the word “voucher” to the convention. He said Medicare was there for his grandmother and mother, but neglected to say that he considers it too generous to be there in the same form for future grandmothers (while firmly opposing the higher taxes on the rich that could keep it strong). He never mentioned his plan to abandon Medicaid on the doorstep of the states, or that his budget wouldn’t come close to a balance for 28 years.

 

The reasons for that are clear: Details are a turn-off, at a boisterous convention or apparently in a full campaign. A New York Times poll last week showed that the Medicare plan advocated by Mr. Ryan and Mitt Romney was highly unpopular in the swing states of Florida, Ohio and Wisconsin. As soon as voters find out that the Republicans plan to offer retirees a fixed amount, they disapprove, clearly preferring the existing system.

 

The Romney campaign knows this, of course, so it has developed a counterstrategy that was fully on display at the convention for those who might have missed it on the trail: Don’t change the plans, but don’t talk about them, either. Instead, invent a phony attack on President Obama’s policies, which are public in full detail, and hope that voters get so confused that they throw up their hands and cast their vote on some other issue or on emotion.

 

The tactic was on display on Wednesday when Senator Marco Rubio of Florida solemnly told CBS News that Medicare will have to look different for a new generation. “Anyone who’s in favor of leaving it the way it is now is in favor of bankrupting it,” he said. Yet Mr. Ryan tried to frighten beneficiaries that evening by denouncing Mr. Obama for cutting $716 billion out of Medicare to pay for health care reform.

 

He didn’t say that the money would come out of hospitals and insurance companies, not benefits, and that he proposed exactly the same cut. He didn’t say that reform provides popular benefits to retirees, like the end of the prescription doughnut hole and improved preventive care. But the effect is clear: voters say in surveys that while they don’t like a Medicare voucher program, they don’t necessarily associate that with the Romney/Ryan ticket and are no less angry with Mr. Obama for his Medicare cuts. So far, the Democratic critique of Mr. Ryan’s plans has not substantially changed a very close race.

 

Mr. Ryan said he wouldn’t blame others, but the message was lost at a convention where the Senate minority leader, Mitch McConnell, tore into Mr. Obama for spending too much time on his golf game and discussing his food preferences.

 

Did Mr. McConnell realize others were listening when he said that the country doesn’t know how the president would deal with the coming expiration of the Bush tax cuts? Mr. Obama has been explicitly clear about his plans: preserve the cuts for the middle class but not for the rich. Not mentioning that fact, and pretending that there is some doubt about it, is central to the Republican Party strategy of inventing an alternate reality.

 

Republicans also aren’t mentioning that their proposal to eliminate federal control of the Medicaid program for the poor would not only damage the health care of millions of struggling Americans but would also affect middle-class families who have relied on the program to pay for nursing home care.

 

The Romney/Ryan plan would eliminate the protection that keeps a married couple from impoverishing itself to qualify for nursing home coverage.

 

The party platform mentions a few Medicaid details, but not a word of the real plan has been uttered at the convention microphone. The best way to duck the tough issues, apparently, is simply to claim very loudly that you are doing the opposite.

New York Times editorial, August 29, 2012

Follow the money: For-profit colleges pumping campaign money to foes of regulation

For-profit colleges and universities and their industry association gave at least $694,829 to political candidates through May 31, much of it to members of Congress who oppose greater regulation of the industry, including proposed curbs on aggressive recruiting of veterans with G.I. Bill benefits.

Among the industry’s principal givers are the Apollo Group (parent company of the University of Phoenix), which has contributed $259,901 to candidates; APSCU, which has given $184,500; and DeVry, Westwood College, Argosy and Art Institutes parent Education Management Corporation, and Everest parent Corinthian Colleges. The Art Institute and Everest have recently established operations in Milwaukee.

The for-profits have contributed to Republican presidential hopeful Mitt Romney and nothing to Barack Obama, whose administration has been largely seen as cracking down on them.

The Association of Private Sector Colleges and University, or APSCU, and its members gave to Senate and House members who have spoken out against the so-called gainful-employment regulation, under which educational programs would lose access to federal aid if their graduates fail to earn enough to repay their student loans. Last month, the federal government reported that five percent of career-training programs at both nonprofit and for-profit schools do not meet that test.
The rule is in limbo after a federal judge this month struck down the way the Department of Education calculated the ratio of debt to income, though he affirmed that it could proceed with the rest.

For-profit colleges gave financial support to lawmakers who wrote letters critical of the regulation or who attended a rally on the west lawn of the Capitol called to protest it, and to members of the Congressional Black Caucus, who said it would discriminate against nonwhite and low-income students.

Also receiving contributions were members of Congress who oppose restrictions on aggressive recruiting by for-profit colleges of veterans who use G.I. Bill benefits, criticized a General Accounting Office report about student-recruiting fraud, or voted against putting for-profits under the new Consumer Financial Protection Agency, and both Republican and Democratic members of the House and Senate education committees. In all, the for-profit schools backed at least 93 representatives and senators or candidates for Congress, 53 of them Republicans, according to federal disclosure forms.

Among those are Republicans George Allen and Josh Mandel, who are challenging Senator Jim Webb (D-Va.) and Senator Sherrod Brown (D-Ohio), respectively, both of whom have favored reforms to regulate the way veterans can be recruited by for-profit schools.

Members of the House who spoke at a 2010 rally against the gainful-employment regulation received campaign-finance contributions, however, including Robert Andrews (D-N.J.), Ted Deutsch (D-Fla.), Brett Guthrie (R-Ky.) and Glenn Thompson (R-Pa.). Guthrie and Thompson also criticized the GAO for an undercover investigation that found recruiting abuses at for-profit colleges, which the industry attacked for transcription errors and other problems, but whose conclusion was not changed.
House Oversight & Government Reform Chairman Darrell Issa (R-Calif.) also criticized the GAO report, as did House Education and the Workforce Committee Chairman John Kline (R-Minn.), and committee member Carolyn McCarthy (D-N.Y.). Issa, Kline and McCarthy also received campaign contributions from for-profit colleges or their industry association.

Other members of Congress who raised questions about the gainful-employment rule got money, too, including Jason Altmire (D-Pa.), Judy Biggert (R-Ill.), André Carson (D-Ind.), Gerry Connolly (D-Va.), Ron Kind (D-Wisc.), Tim Murphy (R-Pa.), former House Speaker Nancy Pelosi (D-Calif.) and Loretta Sanchez (D-Calif.) in the House, and, in the Senate, Minority Leader Mitch McConnell (R-Ky.), and Bill Nelson (D-Fla.).

Some members of the Congressional Black Caucus have attacked the gainful-employment proposal and other regulations as discriminatory, as for-profit colleges enroll disproportionate numbers of low-income students and nonwhites. Among Black Caucus members who got financial support from the for-profit colleges were Alcee Hastings (D-Fla.), Ed Pastor (D-Ariz.) and Edolphus Towns (D-N.Y.).
Members of the House Education and the Workforce Committee received donations, too, including Kline, Andrews, Biggert, McCarthy, Lou Barletta (R-Pa.), Virginia Foxx (R-N.C.), Trey Gowdy (R-S.C.), Joe Heck (R-Nev.), Duncan Hunter (R-Calif.), Mike Kelly (R-Pa.), Howard “Buck” McKeon (R-Calif.), Todd Rokita (R-Ind.), and Dennis Ross (R-Fla.).

So did members of the Senate Committee on Health, Education, Labor & Pensions, including Michael Bennet (D-Colo.), Orrin Hatch (R-Utah), Johnny Isakson (R-Ga.), Mark Kirk (R-Ill.) and Rand Paul (R-Ky.).

For-profits also gave to U.S. Rep. Jim Moran Jr. (D-Va.), whose brother Brian is chairman of the Virginia Democratic Party as well as APSCU’s vice president for government relations; Republican congressional candidate from Arizona Kirk Adams, an alumnus of the University of Phoenix; and Kristi Noem (R-S.D.), cofounder of the Congressional E-Learning Caucus.

At least one senator who’s been critical of for-profits received financial support anyway: Marco Rubio (D-Fla.) a potential vice-presidential running mate to Romney.

This post is based on an article by Jon Marcus in the Hechinger Report, July 12, 2012

For profit colleges pay CEOs based on profits, not student success

Top executives at major for-profit colleges make millions of dollars in annual compensation -- primarily from taxpayer subsidies -– yet most of their pay is unrelated to student achievement, according to preliminary findings from a congressional investigation.

Chris Kirkham reports in the Huffington Post that a report from Rep. Elijah Cummings (D-Md.), the ranking member of the House Oversight and Government Reform committee, found that publicly traded college corporations calculate executive compensation "predominantly on the profitability of their companies rather than the success of their students."

"This is especially troubling given the billions of taxpayer dollars flowing into these institutions and the serious financial risks to students who go through these programs," the report concluded.

For-profit colleges receive much of their revenues from federal financial aid: student loans, Pell grants and military educational benefits. Yet students often fare poorly, dropping out in large numbers and defaulting on federal loans at double the rate of their counterparts at public institutions.

Cummings sent letters in December to 13 for-profit college corporations, seeking information on how the quality of education and student performance are tied to what he termed "lavish" executive pay at the schools. Chief executive officers at several for-profit education companies take in much more than presidents at some of the most prestigious U.S. private universities.

Todd S. Nelson, the former chief executive and now chairman of Education Management Corp., the nation's second-largest operator of for-profit colleges, took in more than $13.1 million last year. The highest-paid Ivy League president, Richard C. Levin of Yale University, received $1.6 million in compensation, according to tax filings.

In a preliminary report sent to Democratic members of the House Oversight and Government Reform committee on Friday, congressional staff found that "the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue."

The report found that 10 of the 13 companies considered profitability for at least 70 percent of executive pay. The other three companies did not provide enough information to determine how student success factored into executive pay, according to the report.

For-profit colleges have increased revenues over the years by rapidly expanding their enrollments.
From 1999 to 2009, the number of students attending for-profit colleges more than tripled, far outpacing the growth of traditional higher education, which grew by a fifth, according to an analysis of federal data from the Education Trust, a student advocacy group.

Although about 12 percent of college students nationwide attend for-profit schools, the sector is responsible for more than 45 percent of federal loan defaults.

In many cases, companies had executive compensation documents that made only "vague references" to student performance and "failed to indicate the specific extent to which these measures affect executive compensation," the report said.

 Career Education Corp., which owns the Le Cordon Bleu chain of culinary schools, 75 percent of executives' bonus pay was based on meeting profit goals, according to the report. The remaining 25 percent of executive compensation was based on "individual executive performance factors."

There were several optional criteria to determine an executive's performance at the company, including student graduation rates and career placement rates. But the company provided no details on whether those student performance goals were actually considered, according to the congressional report.

Nonetheless, all executives at the company reached 100 percent of their individual goals in 2010, the report found. Last year, the chief executive of Career Education Corp., Gary McCullough, resigned after an internal investigation found that the employees were artificially inflating job placement rates at some health and arts programs to remain in good standing with college accreditors -– and continue to be eligible for federal aid dollars.

Representatives from Career Education Corp. and 11 other companies mentioned in the report did not respond to requests for comment Friday.

A spokeswoman for DeVry Inc., Jennifer Dooley, wrote in an e-mail that "our first obligation is to our students, and our shareholders understand this." She continued: "They know that only by focusing on serving our students, and on delivering value over the long term, will we ensure our economic viability."

Kirkham's article is linked here.

Republicans "let them eat cake" proposal raises taxes on poorest families

It turn outs that there are some tax increases that Republicans support. Not the modest increases proposed by President Obama on America's richest families whose incomes have exploded over the past two decades creating the greatest income inequality since the roaring Twenties.

No, Senate Republicans are proposing to extend tax cuts for the nation's affluent families scheduled to expire Jan. 1, while at the same time allowing a series of tax cuts for the working poor and the middle class to end.

In all, the Republican plan would extend tax cuts for 2.7 million affluent families while allowing tax breaks to expire for 13 million on the bottom of the income spectrum. Some might call this "class war."

For more detail read the New York Times article that is linked here.

Two year colleges are solution to nation's economic woes

We recently learned that Wisconsin had the 42nd worst job creation record in the nation last year. Unemployment and underemployment remain unacceptably high.

At the same time, area employers are facing a skilled labor shortage. They simply cannot find the middle skilled workers they need to grow their businesses.

According to New York Times columnist Joe Nocera investing in two year colleges like MATC is the solution.

He writes: "Community colleges can be our salvation...and approvingly quotes Eduardo Padrón, the President of Miami Dade, the nation's largest two year college, “'Community colleges are the great American invention in terms of education. Their raison d’être has always been to help grease the wheels of social mobility...with the skills gap such a pressing problem — and a high school education so clearly inadequate for the modern economy — the task of teaching those skills is falling to community colleges. There really isn’t another institution as well positioned to play that role.'"       

Unfortunately Nocera says: "Many state governments have ravaged the budgets of their community college systems..." Wisconsin, for example, slashed technical college funding by 30% in its last biennial budget. the largest cut in the Wisconsin Technical College Systems' history.

Nocera concludes: "Given what’s at stake, it would be hard to imagine anything more shortsighted than paring back support for community colleges."

His entire column is linked here.