Everest College accused of paying firms to boast job placement rates

An explosive Huffington Post investigation documents that Everest College paid more than a dozen companies to hire its graduates into temporary jobs before cutting them loose.

Everest College's $2,000-per-head "subsidy" program  program in Decatur, Ga., stands among an array of tactics used for years by the institution's parent company, Corinthian Colleges Inc., to systematically pad its job placement rates, according to a review of contract documents and lawsuits and interviews with former employees by the Post's Kirk Kirkham.

More than a marketing tool to lure new students, solid job placement rates allow the company to satisfy the accrediting bodies that oversee its nearly 100 U.S. campuses, while enabling Corinthian to tap federal student aid coffers -- a source of funding that has reached nearly $10 billion over the last decade, comprising more than 80 percent of the company's total revenue.

The practice of paying employers to hire Everest graduates ended in Decatur in late 2011, a year before Corinthian shuttered the campus. But it wasn't the only Corinthian school to try this approach, according to a lawsuit filed in San Francisco in October by the California attorney general. That complaint accuses Corinthian of employing a broad range of fraudulent marketing techniques, including overstating its job placement rates. It specifically accuses two Corinthian campuses in California of paying a temp agency to hire graduates.

 Former employees in career services offices at Everest College campuses in six states described a culture of data manipulation inside the company, one where hitting monthly employment targets took priority over finding quality positions for students. They told HuffPost that their supervisors instructed them to seek out potential employers with typically high turnover rates: That way, as one graduate left or was terminated, a spot opened up for another, enhancing the college's job placement record.

"I was directly told, 'You need to find a company that is willing to take on your students for a short period of time, and who cares if they stay?'" recalled James Proby, a former director of career services at an Everest campus in Colorado Springs, Colo., who left last year after souring on the company. "That becomes a broken system. And that's what Everest is."

Those who have worked and studied at its campuses say Corinthian is a powerful marketing machine finely calibrated to exploit hard economic times. Its business has grown swiftly during and after the Great Recession, which left tens of millions of Americans unemployed and many in search of the kind of training advertised by Corinthian's schools. Between 2007 and 2011, the company's revenues nearly doubled as enrollments soared from 62,000 to more than 93,000, according to securities filings. 

Corinthian's ubiquitous advertisements -- "A better career, a better life, a better way to get there" -- have proved alluring for workers seeking a path to new livelihoods.

"Before I signed up, they said, 'We'll find you the job,'" recalled Johnna Heath, 46, who enrolled three years ago in a course in medical billing at an Everest College campus in Everett, Wash., about 30 miles north of Seattle. "I was like, 'Oh boy, that's great. That just takes all the weight off my shoulders.'"

After years of fruitlessly searching for a job in her field, she recently moved back in with her elderly parents in California.

Robyn Smith, a former deputy attorney general in California who was part of a team that first brought suit against Corinthian in 2007, said false promises about careers are among the most objectionable practices she has seen in the for-profit college industry.

"The job placement deception is really the worst kind of deception," said Smith, now an attorney at the National Consumer Law Center. "The only reason that students are going to these colleges and getting certificates is because they want a higher-paying job. It really goes to the heart of what these students are looking for and hoping for, and that's why it's so upsetting when they graduate and can't find the kinds of jobs that were promised."

Admissions departments on Corinthian campuses function as sales forces, former Corinthian employees said, and those who work there confront strict monthly targets for enrolling new students. These former employees made clear that job placement was a central component of the company's marketing scripts, with career services offices tasked with satisfying the claims -- at least on paper.

Former career services staffers said they felt tremendous pressure from management to meet job placement goals, and to stretch the definition of a successful placement. For example, they were encouraged by executives to count dental assistant graduates who worked at a one-day volunteer event as "placed" in the field. Business graduates who got jobs moving boxes in warehouses were considered successfully employed in "logistics."

Once those jobs ended, the graduates found themselves still staring at untenable debts -- without support from their alma mater. Corinthian abruptly cut them off from further career services, according to former employees: What mattered was finding temporary positions for new graduates in order to maintain the company's official job placement rates.

Toya Smith, a former career services employee at an Everest campus in the Houston area who quit in October, said she and her colleagues were instructed to develop relationships with certain doctor's offices and other firms that were known to churn through lots of Everest students.

"It's like a recycling situation," said Smith. "It really makes you wonder how you are contributing to society. All you are doing is trying to make your numbers. But you're selling a dream to a student that you know, in reality, they are not ever going to realize."

Building A Brand

Accusations that schools leave students facing large debts and poor job prospects are perennial in the for-profit higher education industry. Corinthian owes its very existence to another major player in the business, National Education Corp., which opted to spin off some of its properties after running into trouble with the federal government two decades ago.

The National Education Corp. had owned a network of more than 50 for-profit training schools, making it one of the largest college corporations in the country. But as large numbers of its students began to default on federal student loans in the late 1980s -- more than 40 percent at some campuses -- the federal government threatened to pull funding from some of the worst-performing schools. The parent company began looking for a buyer.

Five senior managers joined to purchase 16 of National Education's schools in 1995, calling the new company Corinthian Schools Inc. They quickly expanded the business by snapping up other ailing trade schools. Four years later, Corinthian sold shares on Wall Street in an initial public offering valued at $48.6 million.

As the company continued to grow, executives saw healthy returns. David Moore, a retired Army colonel and former community college president who became Corinthian's first chief executive, initially put up $100,000 to help buy out the National Education schools, according to news accounts at the time. By 2003, with Corinthian's stock surging, his shares were worth more than $100 million.

But by the following year, Corinthian was attracting the scrutiny of investigators at the California attorney general's office. Prosecutors opened an expansive probe into irregularities in the company's job placement rates, asserting that Corinthian was violating California law by advertising numbers that were significantly higher than reality.

In 2007, the attorney general's office -- then led by Jerry Brown, now California's governor -- filed a complaint alleging a wide range of fraudulent behavior. Among the tactics described in the lawsuit: career services staff had counted students as being"placed" at non-existent businesses they'd created as part of a class project to design business cards.

Margaret Reiter, a former deputy attorney general in California who worked on the case, reflected on the widespread nature of the alleged fraud in testimony before a U.S. Senate committee in 2010.

Corinthian settled the case in July 2007, admitting no wrongdoing while agreeing to pay $5.8 million in restitution to students. As part of the settlement, Corinthian agreed to cease the activities alleged in the complaint.

As news of the attorney general's investigation trickled out, damaging Corinthian's brand and sending its stock price down, the company began renaming the majority of its schools across the country. Several including Bryman College, a chain of more than 20 campuses in a half dozen states, became Everest College. Under the new brand, and with the California settlement behind it, the company was poised for more explosive growth.

Spoils Of Hard Times

The source of that growth was the worst economic downturn since the Great Depression. As unemployment offices filled with freshly jobless people, and as financial anxiety spread, Corinthian's executives smelled a lucrative moment.

"There is no doubt that the current economic environment is challenging, but it also creates opportunities," Corinthian chief executive Jack Massimino said in a November 2008 conference call with investors. "On the positive side of the ledger, as unemployment rises, more people return to school to improve their job skills."

That was how Eric Parms found Everest College. Originally from Ohio, Parms was laid off from his job at a foundry outside Cleveland. He and his wife decided to move to Georgia, seeking a fresh start. But it was still difficult to string together enough income to support their two children. Parms had a job at a local AutoZone store, but it was barely enough to make ends meet.

He saw a television commercial for Everest in 2010 that touted career training in technical fields like air conditioning repair, plumbing and carpentry. He related to the pitch, which mentioned middle-aged parents needing to take care of their families.

"It was like, 'A year from now, you could be in a career making decent money,'" Parms recalled. "So that was my mindset."

He enrolled in the heating, ventilation and air conditioning (HVAC) program and did well, he said. The only time he missed a class was the day he found out his 7-year-old son was diagnosed with leukemia.

But after graduation, he became suspicious. Despite advertisements about job placement rates on the front end, the career services counselors were of little help. 

When he arrived at interviews they'd supposedly set up for him, potential employers often had no idea who he was, and they had never heard of Everest, he said.

Parms was persistent, so eventually the career services staff told him about a short-term opportunity to help lay electrical wire for a contractor at the Centers for Disease Control and Prevention.

The pay was solid -- nearly $19 an hour. But his employer, ADG Enterprises Inc., treated Parms and other Everest graduates on the crew in a way that heightened his sense that he'd been placed in something other than a real job.

One day the crew finished early and had nothing left to do. Rather than send the workers home early, Parms's boss declared that the Everest students were required to work 40 hours a week. He took them to a nearby Home Depot, bought a broom and told them to sweep around the job site.

At the end of the day, Parms recalled, the boss went back to Home Depot and returned the broom. "No contractor does that," Parms said. "That's what made me think something was going on."

He was laid off from ADG Enterprises when the contracting job at the CDC ended. "We busted our asses to get that job done," he said. "But once that was over, they never called any of us back."

He said that when he contacted Everest seeking further job placement help, no one returned his calls.

The school had essentially placed him in a temporary internship program that was partially financed by the company. To increase job placement rates and maintain accreditation, the Everest campus in Decatur had started a "subsidy" program in 2011, paying companies $2,000 for every student they hired.

Documents obtained by HuffPost outlined the details of this "local employer affiliation agreement" at Everest's Decatur campus. Titled "Everest stands behind its graduates," the document refers to the $2,000 bonus as a fee that would "help defray the costs of on-boarding" Everest graduates.

A former career services employee at the Decatur campus said the subsidy program was billed as a way for employers to purchase uniforms or pay for training. But the true intent was to meet placement goals, the employee said.

One of Corinthian's accreditors, the Accrediting Council for Independent Colleges and Schools, required programs to have a 67 percent job placement rate last year to avoid further scrutiny. Another similar body, the Accrediting Commission of Career Schools and Colleges, requires a 66 percent placement rate for a college to avoid additional paperwork. Corinthian reported a 69 percent overall job placement rate for its 2012 graduates, according to the company's most recent annual filing from September.

"We knew what the fine line was, if we were asked, but we all knew that it was a hiring incentive," said the former employee, who requested anonymity because of legal entanglements surrounding the job placement program.

The employee confirmed that ADG Enterprises, the contracting firm that temporarily hired Parms, participated in the $2,000-per-student program. Diana Patterson, the company's president, said she was paid to place Everest students in what she called a "short-term internship project." When the job at the CDC was complete, there was no more work for the students, she said.

The subsidy program effectively undermined the incentive for ADG and other employers to hang onto Everest graduates long-term: They could collect $2,000 just for employing a graduate for 30 days, then lay him off to vacate a space for another graduate, thereby capturing another $2,000 payment.

In several cases, employers did not send paychecks until they received the $2,000 from Everest, meaning the graduates went unpaid for nearly a month, the former employee said.

Some career services employees had family members set up dummy corporations so that they could collect the money for themselves, a former employee said. Some of those employees were later fired.

According to the former employee, top-level Corinthian executives sanctioned and even praised the subsidy program at the Decatur campus when it was launched in the summer of 2011. But in a matter of months, as problems began to surface, the tone quickly changed. Lawyers from the corporate office began showing up to take depositions. Many employees were fired.

The executive director of Everest's accreditor, Michale McComis, did not respond to questions about problems at the Decatur campus, writing in an email that the agency considers accreditation decisions to be confidential. In an annual filing with the Securities and Exchange Commission last year, Corinthian noted only that accreditors put the school on a probationary status because it was not in compliance with "required student achievement outcomes."

The lawsuit filed against Corinthian in October indicates the practice of paying employers to hire graduates wasn't confined to the Decatur campus. In that suit, the California attorney general alleges two Everest campuses in her state also paid a temp agency to place students in order to "meet the accreditation deadline and minimum placement %."

'You Had Your Chance'

The television advertisements that attracted many students to Everest may have shown graduates forging significant careers in medical assisting, criminal justice and massage therapy. But the jobs the school actually arranged for them upon graduation were far less appealing.

Whitney Gilford graduated from an Everest medical assistant program in Houston in 2011 and was promptly placed at a family-owned medical clinic. When she first started, staffers at the clinic told her that lots of Everest students came through but rarely stayed.

She was paid $7.25 an hour, and was often asked to clean toilets or to do the clinic's laundry. She quit after a month. Everest's career services never helped her again, she said.

Her experience reflects the company's standard operating procedures, according to former Everest employees: Once a student is officially placed in a position, she is no longer a priority -- even if she only stays on the job for a few days or weeks.

"The jobs that we had were for the [students] who just graduated," said Ivana Lodovici, a former career services director at an Everest campus outside Miami, who was fired after failing to meet job placement quotas. "We were not allowed to re-place people who had already been placed. It was kind of like, 'You had your chance, that's too bad.'"

Ali Lueder, who worked in career services at an Everest campus outside Chicago, said she was reprimanded for trying to help students who had been recently placed but then fired.

"You don't answer their calls, you don't respond to their emails," she recalled a manager saying. "Sure they're angry, but you just keep ignoring them and eventually they get so fed up they stop calling."

After his initial contract job ended, Eric Parms was forced to seek work without Everest College career services' support. He quickly found himself unprepared for the difficulties of making his way in the HVAC field. When he interviewed for jobs with contractors, Parms said, many of them expressed doubt about the quality of Everest's training, and were unwilling to take a chance on an inexperienced recent graduate.

To work on his own, he would need a Georgia contractor's license. But getting the license required years of experience and written recommendations from other licensed contractors. Parms said Everest never disclosed that fact during the admissions process or while he was attending classes.

His wife, Leticia, also went to Everest to study medical assisting. She hasn't found a job in her field, either. Lately, Parms has been shuffling through temp agencies, stringing together hours working at factories.

With only part-time work for more than two years, Parms has struggled to support his family. After his youngest son, Corleone, was diagnosed with a rare form of leukemia in 2011, doctors recommended an experimental treatment. The medicine is financed by a pharmaceutical company, so the family hasn't had to face any out-of-pocket expenses. 

"You just get tired of it. I kept giving it my all, and I got the same results," Parms said. "Everest has been in the rear-view mirror for a long time now."

New studies: performance based funding doesn't work

In his first budget, Wisconsin Governor Scott Walker slashed the Wisconsin Technical College System's (WCTS) state funding by 30% or $70 million. This year he restored $5 million that will be allocated on "performance measures."

Performance based funding has become a national trend. Across the country Governors and legislatures are rushing to adopt systems that allocate funds to colleges based partly or heavily on performance indicators rather than enrollment, as has historically been the case.

But a new round of research on such programs suggests that these programs generally do not work.

According to Inside Higher Ed: 

Several papers presented at the annual meeting of the Association for the Study of Higher Education explored what Michael McLendon of Southern Methodist University called the performance-based funding "craze," which has become a widely embraced and copied strategy for governors and legislators trying to improve the effectiveness and efficiency of their public higher education systems at a time when they lack either the money (or the will) to spend more on them....  

The session at which three papers were presented broadcast their overall findings in its title: "The Myth of Performance-Based Funding." One paper, by Tiffany Jones of the Southern Education Foundation, examined the extent to which historically black colleges are especially likely to be hurt by state policies that link funding to simple metrics (like graduation rates) that don't take into account the academic preparation of colleges' students and their levels of institutional funding.

Another, prepared by a group of scholars affiliated with the Community College Research Center at Columbia University's Teachers College, examined the goals and policy approaches of performance-based funding systems and concluded that they are sometimes ill-defined and overly narrow, and that they too rarely anticipate (and try to guard against) unintended consequences that can result.

A third paper looked much more directly at what the performance-based programs are accomplishing. The authors, David Tandberg and Mohamed Barakat of Florida State University and Nicholas Hillman of the University of Wisconsin at Madison, examined performance-based systems in 19 states and found that while those programs were largely designed to increase the number of students completing associate degrees, it did so in only four of them. In six states completions actually declined, and in nine others, the patterns were inconclusive.

Another study by the same authors uncovered similar results for bachelor's degree productivity, with a positive impact in four states, a negative effect in four, and no effect whatsoever in 12 others.

"There is no meaningful evidence of effectiveness, but we see a rush toward adoption," said Tandberg, an assistant professor of higher education at Florida State. "It seems as though there is something other than evidence at work here."

What may be at play, said Kevin J. Dougherty, an associate professor of higher education at Teachers College, is that states may be feeling pressure to "jump on the bandwagon" so as not to appear to be "laggards in the competition for effective policy."

That is especially true, he and others said, given that outside groups like Complete College America and the National Center for Higher Education Management Systems are aggressively advocating for performance funding, framing it as an "attractive policy that seems to fit this time of constrained finances."

"...if these authors have it all right, the weight of the evidence is against performance funding," McLendon said. At a time when policy makers are expressing a desire to make decisions based on data, and "increasingly asking researchers like those at ASHE to give them research that has real-world policy consequences, it will be an interesting collision of wills when research about the failure of performance funding meets the ideological commitment of states to move forward with it."

Read the entire Inside Higher Ed article here: http://www.insidehighered.com/news/2013/11/18/studies-question-effectiveness-state-performance-based-funding#ixzz2lNwF8BsJ
Inside Higher Ed 

Federal Trade Commission clamps down on for-profit colleges

By Paul Fain
Inside Higher Ed

The Federal Trade Commission is getting tougher with for-profit colleges, opening a new front in the latest Obama administration-led attempt to crack down on the sector.

The independent agency functions as the federal government's primary consumer cop. Last week it released stricter guidelines on deceptive marketing practices by for-profit colleges that feature vocational programs. The commission advised colleges against misrepresentations about their accreditation status, transferability of credits, job placements, graduation rates or salaries of graduates.

The new standards followed a tip sheet the commission put out last month to help veterans and members of the military better scrutinize for-profits before enrolling.

Both releases included strong language.

“Not every school has got your back. Some for-profit schools may care more about boosting their bottom line with your VA education benefits,” Carol Kando-Pineda, a lawyer with the commission, wrote in a blog entry. “Some may even stretch the truth to persuade you to enroll, either by pressuring you to sign up for courses that don’t suit your needs or to take out loans that will be a challenge to pay off."

The commission’s recent actions are the culmination of a process that began in 2009, with a request for public comments about its vocational school guidelines, which had not been updated in more than a decade. Several consumer groups responded by describing the fraudulent and deceptive marketing practices of some for-profit institutions.

Agency officials apparently heard the message, said Maura Dundon, senior policy counsel for the Center for Responsible Lending. She said the guidelines should serve as a warning to the entire industry.

“We’d really like to see the FTC actually go after some of these guys,” Dundon said. “The FTC has a much stronger enforcement capability than does the Education Department.”

Eight groups submitted comments to the commission. The Association of Private Sector Colleges and Universities, which is the primary for-profit trade group, was the sole commenter to argue that the guidelines are unnecessary and create additional burdens for institutions.

A spokesman for the association declined to comment for this article.

The revised guidelines cite “problematic practices by a range of for-profit colleges,” and mention the scathing report on the sector that Sen. Tom Harkin, an Iowa Democrat, released last year.

In addition, Kando-Pineda’s blog entry said 70 percent of the fraud investigations the U.S. Department of Education’s Office of Inspector General is currently pursuing focus on for-profits.

The commission’s guidelines technically apply only to vocational programs at for-profits that do not offer degrees. That means mostly small, mom-and-pop institutions, like cosmetology schools.

However, the agency has a broad jurisdiction. It generally creates guidelines rather than legally binding rules, said Dundon. And those guidelines can be applied more broadly than the specific language suggests.

“Although the guides specifically address only for-profit institutions that provide vocational and distance education,” the commission said in its guidelines, “the commission believes that the guides can also provide useful guidance to any for-profit colleges that engage in similar practices.”

The commission said it has the authority to dial up law enforcement on deceptive or unfair practices, regardless of whether a college is covered under the language.

The guidelines are designed to address several specific forms of misrepresentations. Those broad categories include deception about licensing exams, availability of financial aid, transferability of credits and in the student recruiting process, such as with bogus depictions of graduation rates or job prospects.

For example, the commission said it is deceptive for a college to use any promotional materials that misrepresent the “availability of employment after graduation from a school or program of instruction.” That includes false descriptions of the type of employment available, graduates’ success in landing those jobs and their salary ranges.

Likewise, the commission spelled out eight questions for veterans and military students to ask about an academic program they may be considering at a for-profit. Those questions revolve around cost of attendance, average debt levels, accreditation status and transfer credits. The commission also provided links for students to find some of that information.  

David Hawkins is director of public policy and research for the National Association for College Admission Counseling. His group submitted comments about the commission’s guidelines.

He said the revised language is a “substantial re-entry” for the commission in overseeing for-profits, and he hopes it will be a “positive force for compliance.”

Read more: http://www.insidehighered.com/news/2013/11/14/federal-trade-commission-steps-scrutiny-profit-colleges#ixzz2kccnnEXK 

For-profit colleges hire former critic

Michael Stratford

November 8, 2013

Inside Higher Ed

The former head of Student Veterans of America, who previously criticized some for-profit colleges, is now working for the trade association that represents those institutions -- a move that has riled some veterans’ advocates and illustrates the high-stakes battle the industry is facing when it comes to veterans' education.

The Association of Private Sector Colleges and Universities, the main group that lobbies in Washington on behalf of for-profit institutions, announced this week that it had hired Michael Dakduk as its vice president for military and veterans affairs, a newly created position. Dakduk previously served as the executive director of Student Veterans of America, a nonprofit organization with more than 900 chapter affiliates.

Under his leadership over the past several years, SVA tangled with the for-profit industry on several occasions. For instance, the national organization in 2012 suspended 40 of its chapters at for-profit colleges for improperly promoting the universities and not being sufficiently student-run.

Dakduk's move to APSCU comes as veterans' issues at for-profit colleges are once again heating up on Capitol Hill. And just in his first week, Dakduk found himself in the position of lobbying against policies he promoted in his previous capacity at the veterans' advocacy group.

On Wednesday, for example, a handful of Democratic senators who have been vocal critics of for-profit colleges reintroduced legislation that would tighten the so-called “90/10 rule” that applies to for-profit institutions. That law caps colleges’ receipt of federal student aid money at 90 percent of their total revenue.

But federal educational benefits for veterans and active-duty service members don’t count toward the limit.

Dakduk, in 2012, referred to that exception in the 90/10 law as a “loophole” that needed to be closed.

“By not counting military tuition assistance and GI Bill benefits in the equation, some for-profit institutions are using the loophole to aggressively and deceptively recruit veterans,” he said in a statement, echoing the language that critics of for-profit colleges have used in describing the rule. Those critics argue that the current 90/10 law leaves a perverse incentive for for-profit schools to aggressively recruit veterans, since every dollar in veterans' benefits that a school receives effectively raises, by nine dollars, its ability to accept other forms of federal student aid, such as Pell grants or government loans.

Testifying before Congress in 2012, Dakduk also pushed for legislation that would tighten the 90/10 rule.
“Quite frankly any business that complains about having to compete for 10 percent of their customers should not be in business,” he said in written testimony to the House veterans' committee.

This week, though, Dakduk said in a statement released by APSCU that the renewed effort to tighten the 90/10 rule would “harm postsecondary access and opportunity” for veterans and active duty service members.

“The 90/10 rule is not a measure of institutional quality,” he said. “It is a measure of the socioeconomic position of the student population served.”

For APSCU, the hiring of Dakduk gives the organization a boost on veterans' issues at its institutions, which are increasingly under scrutiny from lawmakers, state attorneys general, and some veterans and consumer advocacy groups. At stake for the industry is a huge market of veterans and active-duty service members, who are turning to higher education as they return home from two wars.

The industry group has taken steps in recent months to be more aggressive about self-regulation and to focus on best practices among its institutions. APSCU, for instance, convened a blue ribbon taskforce -- on which Dakduk served as a special adviser -- to develop recommendations on how to best serve veterans at for-profit colleges.

Dakduk said in an email that he chose to join APSCU because he believes its members “play a critical role in the transition of service members into postsecondary education and ultimately onto career pathways.”

“I found in my previous career that it is too easy for people to be critics,” he added. “Anybody can talk about problems; what I am focused on is rolling up my sleeves and working with people on the frontlines of education to address the challenges our service members and veterans may face.”

Still, news of Dakduk’s departure to APSCU was greeted with disappointment by some in the veterans advocacy community, according to Ted Daywalt, the president of VetJobs, another advocacy groups. The leaders of several other groups expressed similar feelings but declined to speak publicly.

“I know that his decision is very disappointing to many people in the veteran community," Daywalt said. "Because some people see the organization he is joining as not having had the concern they should for the way the predatory for-profits have been taking advantage of and ripping off veterans."

“However," he continued, "I hope he will use his new position coupled with his understanding of the problems that veterans and their families have had with predatory for-profit schools, to educate the predatory for-profit schools to change their ways.”

Dakduk's successor at Students Veterans of America, D. Wayne Robinson, said in an interview Thursday that the organization would continue pushing for stricter rules on for-profit colleges, such as tightening the 90/10 law. But he said he also wanted the group to take a balanced approach to the issue.
“We’re very hesitant to paint the entire industry with a broad stroke," he said. "But I certainly want to use our voice and advocacy on behalf of veterans that have been preyed upon.”


Read more: http://www.insidehighered.com/news/2013/11/08/veterans-advocate-changes-jobs-and-positions#ixzz2k3oZN2jK
Inside Higher Ed

California Attorney General Sues Corinthian

SAN FRANCISCO -- Attorney General Kamala D. Harris today filed a lawsuit against Corinthian Colleges, Inc. (CCI) and its subsidiaries that operate Everest, Heald and WyoTech colleges for false and predatory advertising, intentional misrepresentations to students, securities fraud and unlawful use of military seals in advertisements.

The complaint alleges that CCI intentionally targeted low-income, vulnerable Californians through deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs. CCI deployed these advertisements through persistent internet, telemarketing and television ad campaigns. The complaint further alleges that Corinthian executives knowingly misrepresented job placement rates to investors and accrediting agencies, which harmed students, investors and taxpayers.

“The predatory scheme devised by executives at Corinthian Colleges, Inc. is unconscionable. Designed to rake in profits and mislead investors, they targeted some of our state’s most particularly vulnerable people—including low income, single mothers and veterans returning from combat,” Attorney General Harris said.

“My office will continue our investigation into the for-profit college industry and will hold accountable those responsible for these illegal, exploitative practices.”

According to Harris’ complaint, CCI’s predatory marketing efforts specifically target vulnerable, low-income job seekers and single parents who have annual incomes near the federal poverty line. In internal company documents obtained by the Department of Justice, CCI describes its target demographic as “isolated,” “impatient,” individuals with “low self-esteem,” who have “few people in their lives who care about them” and who are “stuck” and “unable to see and plan well for future.”

According to the complaint, CCI advertised job placement rates as high as 100% for specific programs when, in some cases, there is no evidence that a single student obtained a job during the specified time frame.

The complaint further alleges that CCI runs millions of online and mobile ads offering ultrasound, x-ray, radiology, and dialysis technician programs at their California campuses—when, in fact, CCI does not offer those programs. CCI’s call center agents are disciplined if they tell callers that CCI does not offer these programs. Additionally, according to the complaint, CCI includes official Army, Navy, Air Force, Marine Corps, and Coast Guard seals in mailings and on web sites without authorization and in violation of California law.

The complaint alleges that CCI committed securities fraud by reporting a nationwide job placement rate of 68.1% in presentations to investors, when senior executives knew this percentage was false. The complaint describes internal audits emailed to CCI executives that show job placement data error rates between 53% and 70%. The complaint references an email from a CCI executive which explains that in 2011, two Everest College campuses (Hayward and San Francisco) paid a temporary employment agency “to place students to meet the accreditation deadline and minimum placement %.” The complaint also states that CCI double-counted job placements and failed to maintain required records of reported job placements.

According to a recent CCI securities filing, the average tuition for a CCI associate’s degree is $40,000 and the average tuition for an online CCI associate’s degree is $34,000. The average tuition for CCI’s non-degree healthcare programs is $17,000.

CCI is based in Santa Ana and currently operates 24 Everest, Heald and WyoTech campuses in California, 111 total campuses in North America and three online programs. Out of the 81,000 students who attend CCI colleges, approximately 27,000 (33%) are in California.

Corinthian opened a controversial Everest campus in Milwaukee, Wisconsin in 2011. The city provided the campuses' developer with $11 million in interest free bonds. Milwaukee's Everest campus closed a year and one half later with a  drop out rate of more than 50% and a job placement rate of less than 6%. CCI promised to pay off the federal financial aid loans of the students who had not completed their degrees.

CCI is a publicly traded corporation with assets of over $1 billion. Federal funds account for almost all of CCI’s annual revenue.

In July 2013, Attorney General Harris filed a separate lawsuit in Sacramento Superior Court to enforce an investigative subpoena against Bridgepoint Education Inc., operator of Ashford University, as part of an investigation of that company’s practices.

A copy of the complaint is attached to the electronic version of this release at: http://oag.ca.gov/news

How For-Profit Colleges Stay in Business Despite Horrible Track Records

Last week the Huffington Post ran an in-depth expose on how for-profit colleges like Everest College (Corinthian College Inc.) and Sanford Brown (Career Education Corp.), who recently closed Milwaukee campuses, have created an accreditation system that ensures their continued operation and access to billions in federal funds despite dismal job placement and graduation rates.

It's a classic case of the fox guarding the chicken coup or, as they say in more polite company, a blatant conflict of interest that allows the hucksters who open these diploma mills to rake in millions while leaving students with nothing but broken dreams, credits that don't transfer and life-long debt.

It's worth the read:

Over the past decade, Corinthian's schools have remained fully accredited, enabling the publicly traded company to tap federal student aid coffers for nearly $10 billion, or more than 80 percent of its total revenues, according to a Huffington Post review of securities filings and disciplinary records maintained by its accreditors.

By every available indication, Corinthian Colleges Inc., one of the country's largest chains of for-profit colleges, stands out as an institution whose students face especially long odds of success.  At nearly half of Corinthian's schools, more than 30 percent of students default on their federal loans within three years of leaving campus, according to the most recent federal data. 

California last year cited excessively high default rates in denying access to state tuition grants at 23 of the company's campuses. Over the last three years, attorneys general in eight states and the federal Consumer Financial Protection Bureau have probed Corinthian's recruitment claims and financial aid practices, raising the prospect of lawsuits. Yet by the reckoning of the accrediting bodies that are supposed to scrutinize Corinthian's 97 U.S. campuses, its schools are meeting standards on student debt and adequately preparing graduates for jobs. 

Corinthian's success in maintaining accreditation even as its students sink into default typifies the state of play in the for-profit college industry and underscores both the incentives and the provenance of the people doing the accrediting work: Accrediting agencies receive their funding from fees paid by the very colleges they monitor. The review teams they dispatch to visit and rate schools are composed of volunteers from other schools accredited by the same agencies. 

 During a congressional hearing on higher education policy held earlier this year, one expert likened this arrangement to the cozy practices that fueled the last financial crisis, when Wall Street banks hired credit-rating agencies to certify the sanctity of the bonds they forged from risky mortgages. "This is like bond ratings firms giving AAA ratings to mortgage-backed securities sold by the same firms that pay their fees," Kevin Carey, the director of education policy at the New America Foundation, said at the hearing. "It does not work out well in the long run." 

The entire expose is linked here.

Politifact aims and misses on Wisconsin Minnesota economic comparison

Politifact did it again. Minnesota is superior to Wisconsin on all economic performance measures except business climate indices.

So how does Politifact rate a Minnesota Legislator’s claim that Minnesota is outperforming Wisconsin?

Rather than acknowledge that Minnesota is experiencing faster growth (3.5% to 1.5%) with higher incomes (Minnesota's per capita income is $4500 more than Wisconsin's), more jobs (between July 2012 and July 2013 Minnesota created twice as many jobs as Wisconsin) , and lower unemployment (5.2 percent, nearly one-quarter lower than Wisconsin’s 6.8 percent.), Politifact rates the statement half true because Wisconsin scores better on some business climate and competitiveness indices.

 Since Minnesota leads Wisconsin in all the economic measures that matter. what this really tells us is that business climate and competitive measures which are subjective and heavily weighted toward states with low tax rates and minimal regulations are of virtually no value.