Friday, December 30, 2011

DA Asks Wis. Supreme Court to Reopen Union Lawsuit

December 30, 2011

MADISON, Wis. (AP) — A prosecutor asked the Wisconsin Supreme Court on Friday to reopen his lawsuit challenging Gov. Scott Walker's contentious collective bargaining law, contending a justice who voted to dismiss the suit earlier this year got free legal help from the firm defending the law.

Dane County District Attorney Ismael Ozanne argued in filings with the court that it should vacate its earlier decision, reconsider the case and disqualify Justice Michael Gableman from participating if he won't recuse himself.

Wisconsin's ethics code prohibits state officials from accepting free gifts, and the judicial ethics code bars judges from accepting gifts from anyone who is likely to appear before them.

"Reasonable, well-informed people would reasonably question Justice Gableman's ability to be impartial under the facts presented here," Ozanne wrote. "Respectfully, any litigant in any case deserves to have his case heard by a judge who has not secretly received a valuable gift from the other side's lawyer."

Gableman's attorney, Vin Dinh, didn't immediately return a message late Friday afternoon. He told the Milwaukee Journal Sentinel this week that he doesn't believe the free legal services amounted to a gift.

Walker's spokesman, Cullen Werwie, issued a one-sentence response by email late Friday afternoon, saying only that "we are confident the Supreme Court got it right the first time."

Ozanne initially filed the lawsuit in March, alleging Republican lawmakers violated open meetings laws when they convened a committee to revise the collective bargaining measure without proper public notice. The meeting came during the height of massive around-the-clock protests at the Capitol against the legislation, which eliminated most public workers' union rights.

The Michael Best and Friedrich law firm and the state Justice Department defended the law. The case eventually landed in the Supreme Court. The court's four-justice conservative majority ultimately upheld the law, saying legislative rules trumped the open meetings law.

Gableman had retained the Michael Best and Friedrich firm to defend him in a 2008 ethics case stemming from one of his campaign ads. The ad accused his opponent, then-incumbent Justice Louis Butler, of finding a loophole for a sex offender who went on to molest another child. It didn't mention that Butler failed to get the offender out of prison early and that the offender committed the new crime after he had served his sentence.

Word surfaced earlier this month that Gableman signed a contingency agreement with the law firm that called for him to pay attorneys' fees only if he prevailed in the case, much like promises injury lawyers make to clients not to collect payment unless they win the case. The Supreme Court ultimately deadlocked 3-3 on whether the ad violated the ethics code, which meant he didn't lose or win the case and didn't have to pay the firm's attorneys for their services.

Public sector unions have filed three other, pending lawsuits challenging the collective bargaining law. Two are in federal court. The third is in Dane County Circuit Court.

Thursday, December 15, 2011

Federal Reserve: Wisconsin leads nation in job loss

Where are the jobs?
Not in Wisconsin, according to this map by the Federal Reserve Bank of Philadelphia which illustrates U.S. economic growth from July 1, 2011 when Governor Walker's austerity budget went into effect, to October 1, 2011.   
The color code goes from dark green (high growth) to red (lowest growth.)
Guess which state has dropped to the bottom? That's right.......Walker's Wisconsin!
Wisconsin trails the national economy because the Wisconsin Republican Party's “cuts only” budget sucked billions of dollars of demand out of the state economy. 
 When workers are laid off or their incomes decline, they reduce their spending. And when consumers stop spending, businesses don't invest.  Instead, they lay-off  employees and reduce their own spending. A vicious downward cycle unfolds. 
This is exactly what has happened in Wisconsin
Walker's budget reduced public employees' disposable incomes ($3,668 a year for the typical public employee making $40,000 a year), raised taxes on low- income people, and slashed state spending which led to lay-offs of teachers and local government employees further reducing spending. He also rejected $830 million in federal high speed rail stimulus funding.
Wisconsin's economy is struggling because of a lack of demand. The Republican Party's response has been to reduce public demand. The result - Wisconsin, which has lost jobs for the last 5 months, is dead last among 50 states in economic performance.

Where are the jobs? Not in Walker's Wisconsin.

Tuesday, December 13, 2011

Congress to investigate lavish CEO pay at for-profit colleges

Chris Kirkham
Huffington Post

Over the past three years, lawmakers on the House Oversight and Government Reform committee have investigated bonuses and executive pay at companies that benefited from billions in taxpayer dollars: Fannie Mae, Freddie Mac, AIG and others bailed out after the 2008 financial crisis.

Now, Democrats on the committee have turned their attention to another industry whose fortunes are closely tied to federal money: for-profit colleges.

Rep. Elijah Cummings (D-Md.), the ranking member on the House oversight committee, has requested executive compensation information this week from 13 Wall Street corporations that own for-profit colleges. According to letters he sent to the companies' executives Monday, Cummings is seeking information on how what he termed "lavish" executive pay at college corporations is tied to the quality of education and student performance at such schools.

"When compared to public and non-profit schools, for-profit companies spend a smaller percentage of their funds on student education, reserving more for marketing, advertising, recruitment and other non education expenses," Cummings said. "Their student success rates are lower, and their students are more likely to default on loans. But their CEOs consistently make much more than their counterparts at public and non-profit schools."

Brian Moran, head of the Association of Private Sector Colleges and Universities, a trade group representing for-profit colleges, called Cummings' announcement "more politics." He argued in a statement that the investigation "fails to acknowledge the important role private sector colleges and universities have in educating non-traditional students to compete for jobs in a very difficult economic environment."

"Rather than singling out one sector, we hope that Representative Cummings evaluates all areas of higher education so that the true beneficiary is the student," read the statement from Moran, interim chief executive and president of the group.

Including salary, bonuses and stock options, the majority of chief executive officers at the 13 companies received more than $3 million each in compensation, according to Cummings' office and securities filings from the companies. The top executives at DeVry Inc., ITT Educational Services Inc. and the Apollo Group Inc., which owns the University of Phoenix, all received more than $6 million, according to the most recent securities filings detailing executive pay.

By contrast, the president of Harvard University, Drew Gilpin Faust, received a base pay of $714,000, and a total estimated compensation of $874,000, according to federal tax documents from the non-profit institution.

Several of the largest publicly-traded companies owning for-profit colleges receive more than 80 percent of their revenues from government student aid dollars such as Pell Grants and federal student loans. Over the past year, the Obama administration has stepped in with stricter accountability rules aimed at protecting billions of dollars in federal subsidies going to for-profit higher education.

Statistics from the Department of Education show that for-profit schools on average spend less than a third of what public universities spend on student instruction, despite high price tags for tuition. Students at for-profit colleges are responsible for an outsized share of student loan defaults: 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 letters to the 13 executives, Cummings wrote that he was requesting the agreements on corporate compensation "as part of an effort to determine whether your salary, bonuses and other compensation are appropriately tied to the performance of the students you educate, the vast majority of which pay for their education with federal tax dollars."

The Apollo Group noted in a filing Tuesday that a "substantial portion" of what Cummings requested was in public documents filed with the Securities and Exchange Commission, but said the company intends to "cooperate fully with Rep. Cummings to provide any necessary additional information."

A spokeswoman for Rep. Darrell Issa (R-Calif.), the chairman of the House oversight committee, did not respond to requests for comment Tuesday.

Cummings asked for the "full, unredacted copies of compensation agreements" by Dec. 23.

Last month the House oversight committee held a hearing on executive pay at Fannie Mae and Freddie Mac, the quasi-governmental mortgage giants that were rescued by the government in 2008 as the housing market collapsed. In 2009, the committee also held hearings on executive pay at major firms that received government bailout money, including American International Group Inc., Citigroup, Bank of America, Chrysler and General Motors.

Saturday, December 10, 2011

With Lobbying Blitz, For-Profit Colleges Diluted New Rules

Last year the Obama administration vowed to regulate for-profit colleges and their unscrupulous practices that frequently left students with huge debts, non-transferable credits and dashed dreams .

In an opening volley that shook the $30 billion industry officials proposed new restrictions to cut off the huge flow of federal aid, the industries main source of funds and profits, to unfit programs. The gainful employment regulation was designed to deny federal funds to programs that did not result in employment with wages high enough to pay off student loans.

But the New York Times Eric Lichtblau reports that "...after a ferocious response that administration officials called one of the most intense they had seen, the Education Department produced a much-weakened final plan that almost certainly will have far less impact as it goes into effect next year."

"The story of how the for-profit colleges survived the threat of a major federal crackdown offers a case study in Washington power brokering. Rattled by the administration’s tough talk, the colleges spent more than $16 million on an all-star list of prominent figures, particularly Democrats with close ties to the White House, to plot strategy, mend their battered image and plead their case.... "
"In all, industry advocates met more than two dozen times with White House and Education Department officials, including senior officials like Education Secretary Arne Duncan, records show, even as Mr. Obama has vowed to reduce the “outsize” influence of lobbyists and special interests in Washington.
The result was a plan, completed in June, that imposes new regulations on for-profit schools to ensure they adequately train their students for work, but does so on a much less ambitious scale than the administration first intended, relaxing the initial standards for determining which schools would be stripped of federal financing."

The losers, the thousands of students who are lured into attending for-profit colleges with promises of accredited degrees, jobs and increased income, but who end up with a lifetime of debt, with worthless credits, and without the jobs and income they were promised.

The joke in Washington, according to Lichtblau, is that the industry effort to defeat the regulations mainly ensured “gainful employment” for the capital’s Democratic lobbyists and political consultants.

The Times article is a disturbing case study in how corporate America and its lobbyists manipulate public policy to serve their interests.It is linked here. 

Central Wisconsin not open for business

Jim Rowen repoirts in his blog, The Political Environment:

More bad news for Marathon County:

Wausau Paper Corp. devasted the tiny Village of Brokaw this week with news that the paper mill there will shut down - - and the Wausau Daily Herald is pegging the job loss at 1,100 - - 450 jobs at the plant and another 650 as collateral damage elsewhere.

Unbelievably, a business making doors and windows said today it is closing in Mosinee - - where Wausau Paper is headquartered - - and the job impact, without the indirect effect, is put at 566.

Is Central Wisconsin open for business?

Nope: businesses are closing.

Thursday, December 8, 2011

Superintendent of teacher featured in Walker ad says ad is a lie

Scott Walker has a new ad featuring Jeff Knutson, a fourth grade teacher in the Monona Grove school district.  Knudson claims:
 "When the state budget passed in Madison, a lot of us thought we might lose our jobs. We figured if we didn't get laid off, our class sizes would become unmanageable. But that, didn't happen."
This, according to Knutson's boss,  Monona Grove superintendent Craig Gerlach, is simply false.  Like nearly all school districts in Wisconsin, Monona Grove has been forced to lay-off teachers and has experienced increases in class sizes:
"The numbers at Monona Grove clearly don't work.  We struggled to put together a budget this year, we made significant cuts in terms of programs, laid-off teachers... we closed a building.  Next year, quite frankly, will be brutal."

Wednesday, November 23, 2011

Wisconsin leads nation in job loss

‎Ten months after Governor Walker's Special Legislative Session on jobs that resulted in more than 100 million in corporate tax breaks, Wisconsin lost more jobs than any state in the nation according to a U.S. Bureau of Labor Statistics report released Tuesday.

The bureau said Wisconsin was the only state in the nation with a statistically significant decline in employment, dropping from 2,757,200 jobs in September to 2,747,500 jobs

Where are the jobs?

In Illinois, ridiculed by Walker for raising taxes, created the most jobs in the nation.

Governor Walker, Where are the jobs?

Tuesday, November 22, 2011

For-profit college CEO resigns over flawed placement rates

The Career Education Corporation's CEO has resigned after an outside investigation found "improper" practices in the for-profit company's determination of job placement rates.

The Career Education Corporation operates over eighty campuses including Sanford-Brown University and Sanford Brown Institutes enrolling 116,000 students.  

The company's third quarter report to investors to the Securities and Exchange Commission said that the review by an outside law firm the to investors disclosed that some of Career Education's health education and art and design schools failed to provide documentation to back up job placements, and that 13 of its 49 schools in those fields had failed to meet the placement rate requirements of the Accrediting Council for Independent Colleges and Schools.
While a news release did not specifically say so, it appeared that those developments had prompted the resignation of Gary E. McCullough as president and chief executive.

Friday, November 18, 2011

Two-year college students blocked from enrolling

Colleges and universities are experiencing unprecedented cuts in public funding.

In Wisconsin Governor Walker's budget slashed technical college funding by 30% for each of the next two years. As a result, technical college state funding has returned to a level not seen since the 1980s. The state's investment in the Milwaukee Area Technical College, the Wisconsin Technical College Systems' (WTCS) flagship institution with more than 50,000 students,  has dwindled to a measly 7% of total funding. The state's contribution is suppose to be 33%..

At the same time the University of Wisconsin system was cut by $250 million and more cuts are being contemplated.

Across the country similar draconian cuts are undermining access to higher education as colleges and universities cut back on classes and sections and increase tuition to make up for the loss of state funding. The cuts are also undermining the ability of two-year colleges like MATC to address the skills gap by training the  the next generation of skilled and technical workers at the very time that large numbers of veterans and dislocated workers are enrolling to acquire new skills of upgrade existing ones.

The Latest issue of the Chronicle on Higher Education reports:

A weak job market has brought a wave of applicants to community colleges in search of job training, but those same students are finding it difficult to gain access to courses they need, says a report released Thursday.

Nearly four in 10 community-college students responding to a national survey commissioned by the Pearson Foundation said they were unable to enroll in at least one class they wanted this fall, and 20 percent said they had trouble enrolling in the courses they needed to complete their degree or certificate.
Students who had the most difficulty with course enrollment were those attending part time and taking remedial courses.

Pearson's first survey of community-college students, conducted last year, found similar results, with one in five students feeling squeezed out of classes they needed.

The Chronicle of Higher Ed article is linked here.

Friday, November 4, 2011

Putting Millionaires Before Jobs

New York Times editorial
November 3, 2011

There’s nothing partisan about a road or a bridge or an airport; Democrats and Republicans have voted to spend billions on them for decades and long supported rebuilding plans in their own states. On Thursday, though, when President Obama’s plan to spend $60 billion on infrastructure repairs came up for a vote in the Senate, not a single Republican agreed to break the party’s filibuster.

That’s because the bill would pay for itself with a 0.7 percent surtax on people making more than $1 million. That would affect about 345,000 taxpayers, according to Citizens for Tax Justice, adding an average of $13,457 to their annual tax bills. Protecting that elite group — and hewing to their rigid antitax vows — was more important to Senate Republicans than the thousands of construction jobs the bill would have helped create, or the millions of people who would have used the rebuilt roads, bridges and airports.

Senate Republicans filibustered the president’s full jobs act last month for the same reasons. And they have vowed to block the individual pieces of that bill that Democrats are now bringing to the floor. Senate Democrats have also accused them of opposing any good idea that might put people back to work and rev the economy a bit before next year’s presidential election.

There is no question that the infrastructure bill would be good for the flagging economy — and good for the country’s future development. It would directly spend $50 billion on roads, bridges, airports and mass transit systems, and it would then provide another $10 billion to an infrastructure bank to encourage private-sector investment in big public works projects.

Senator Kay Bailey Hutchison, a Republican of Texas, co-sponsored an infrastructure-bank bill in March, and other Republicans have supported similar efforts over the years. But the Republicans’ determination to stick to an antitax pledge clearly trumps even their own good ideas.

A competing Republican bill, which also failed on Thursday, was cobbled together in an attempt to make it appear as if the party has equally valid ideas on job creation and rebuilding. It would have extended the existing highway and public transportation financing for two years, paying for it with a $40 billion cut to other domestic programs. Republican senators also threw in a provision that would block the Environmental Protection Agency from issuing new clean air rules. Only in the fevered dreams of corporate polluters could that help create jobs.

Mitch McConnell, the Senate Republican leader, bitterly accused Democrats of designing their infrastructure bill to fail by paying for it with a millionaire’s tax, as if his party’s intransigence was so indomitable that daring to challenge it is somehow underhanded.

The only good news is that the Democrats aren’t going to stop. There are many more jobs bills to come, including extension of unemployment insurance and the payroll-tax cut. If Republicans are so proud of blocking all progress, they will have to keep doing it over and over again, testing the patience of American voters.

Friday, October 14, 2011

Republicans attack on labor board is attack on labor rights

Labor Rights, Under Republican Attack


In the past month, the National Labor Relations Board has come under furious attack from Republicans in Congress, and decades-old workers’ rights are at risk. Backed by a well-financed lobbying and publicity offensive, Republicans are using a recent labor-law complaint against Boeing to achieve a radical goal that goes far beyond the legal issues in the case: unraveling workers’ rights that have been part of the fabric of our social contract since the Great Depression.

In April, the labor board’s acting general counsel filed a complaint against Boeing, alleging that the company retaliated against unionized workers by opening a nonunion aircraft facility in South Carolina, instead of using a facility in its home state of Washington. Citing multiple public statements by Boeing executives, the general counsel contended that the company decided to locate the plant in South Carolina in significant part to punish its Washington workers for having exercised their right to strike, enshrined in the National Labor Relations Act of 1935.

Boeing has an opportunity at trial and in administrative and court appeals to disprove these allegations. It also may avoid the general counsel’s proposed remedy — an order restoring the aircraft production in question to Washington — if it can show that the order would be unduly burdensome.

But for Republicans, the legal process is beside the point. Representative Darrell Issa of California has disparaged the labor board as a “rogue agency,” and the presidential candidate Mitt Romney has called the general counsel’s complaint a “job killer” — even though the outcome of the case will determine only the location, not the number, of jobs. Last month, in an ambush against a federal agency’s powers in a pending case, the Republican-controlled House, voting almost entirely along party lines, approved a bill that would eliminate one of the paramount federal rights afforded workers for decades by prohibiting the labor board from ever ordering any employer to restore jobs illegally outsourced or relocated.

The attack against the Boeing complaint rests on three myths.

Myth No. 1: The general counsel has invoked an unprecedented legal rule. Apart from its unusually large scale (the location of an estimated 1,800 jobs is at stake), the Boeing case involves nothing legally new. The general counsel’s complaint is based on principles accepted by the labor board and the courts over many decades. In 1967, the future Supreme Court Chief Justice Warren Burger (then a federal appellate judge) wrote a decision holding that an employer may not transfer work to punish employees for exercising National Labor Relations Act rights (like the right to strike). Likewise, the labor board has long had the authority to order restoration of work relocated as part of an unfair labor practice, and the appellate courts have approved such orders. In the absence of work restoration, any alternative remedy available to the labor board — like an order that Boeing post a bulletin-board notice promising to obey the law from now on — would be cosmetic.

Myth No. 2: The Boeing complaint means that the government can dictate the location of businesses. Everyone agrees that a company may legally locate its production anywhere it wishes and for any reason — except retaliatory ones. Imagine if Boeing had deliberately located a new plant in an area with a predominantly white labor force and then publicly stated that it did so because it was tired of listening to discrimination complaints made by African-American employees at its home plant. If the general counsel’s allegations are true, Boeing did something legally indistinguishable — unless labor rights no longer count as “real” rights.

Myth No. 3: The general counsel has discretion to drop the case in the name of economic policy. The general counsel is not a policy maker authorized to base decisions on what is good for employment in a particular region of the country. His discretion is confined to enforcing the policy already chosen by Congress in the National Labor Relations Act. If his investigation yields reasonable cause to believe that a violation occurred, his only legally proper course is to bring a case to be decided through the ordinary process. If the Internal Revenue Service determines that a South Carolina employer owes millions in unpaid taxes, should it drop the case if it believes doing so would help the local economy?

The Boeing case is not about jobs. Selecting one place rather than another to build planes creates no additional jobs. The general counsel did his job as the law requires. It would be tragic if his dutiful efforts provided an occasion for Republicans to extinguish decades-old workers’ rights.

Mark Barenberg, James Brudney and Karl Klare are professors of labor law at Columbia, Fordham and Northeastern University, respectively.

Wednesday, October 5, 2011

For-profit colleges target Britain despite being sued by the U.S. Department of Justice and fraud investigations in 18 states

By Hannah Richardson,BBC News education reporter

Minister David Willetts held at least 12 meetings with for-profit education firms before publishing his plans for university reform for England.

Meetings with representatives from two firms accused of recruitment or public loan fraud in the US were among them.

The universities minister published plans to make it easier for private providers to enter the sector in June.

The government said Mr Willetts had spoken to higher education providers "of all types" before doing so.

Mr Willetts has been up-front about his plans to open up England's higher education system to private providers to help increase the number and type of university places available and boost competition.

But his plans have drawn criticism from academics and opposition politicians who fear that it could lead to a fall in the quality of education available, with more learning being carried out online and in non-traditional ways.

Most of the meetings were revealed to the BBC in answer to a parliamentary question from Barry Gardiner MP.

He said the scale of the contact between these for-profit firms and Mr Willetts was "extraordinary and appalling".

In July 2010 Mr Willetts met one firm, the Education Management Corporation (EDMC), which is currently being sued for $11bn by the Department of Justice in the US over its alleged student recruitment practices.

The firm is accused of wrongly using federal education funds to pay bonuses to its student recruiters, a claim it vehemently denies.

Another firm Mr Willetts met, Apollo, has paid out millions of dollars over claims it improperly recruited students to the University of Phoenix.

Although Apollo admitted no liability in a whistleblower case in 2009, it settled saying it wanted to bring "closure to a long-running dispute" and avoid "uncertainty and further expense associated with protracted litigation".

Apollo is the parent company of BPP University College of Professional Studies, which gained university college status last year. It was the first private sector institution to gain this status for more than 30 years.

Vocational degrees

Mr Willetts met representatives of Apollo and BPP in May 2011. He also met BPP as part of wider meetings with higher education providers in December 2010 and January 2011.

A spokesman for BPP said of the meetings: "There was an exchange of views which centred on BPP University College's plans to grow its career-focused degree programmes."

Mr Willetts also met publishing giant Pearson five times. This includes three meetings in close succession in the run-up to the publication of White Paper on higher education in England, which pledged to "make it easier for new providers to enter the sector".

Mr Willetts, who spoke at a Pearson event in May 2010 about the future of higher education, also plans to allocate 20,000 places to degree course providers charging less than £7,500 a year.

These are expected to be mainly from further education colleges and the private providers, and have widely been seen as a means of addressing the fact that so many universities plan top-price fees of £9,000 a year.

Pearson, one of the world's biggest publishers, has made no secret of its plans to seek degree-awarding powers in England's education system.

After a meeting with Mr Willetts in December 2010, the firm announced that it was planning to start by offering four vocational degrees with a further education college at "very competitive" prices. These will be piloted from September 2012, when the new fees system beings.

It also said in June that it would be offering degrees in conjunction with Royal Holloway, part of the University of London, which would be the validating partner.

But it is still pursuing its aim of gaining degree-awarding powers itself, potentially working as a validating partner for England's further education colleges.

Continue reading the main story “Start QuoteThese are not chance meetings; they are ideologically driven ”
End Quote Barry Gardiner MP
A Pearson spokesman said: "Pearson provides and develops qualifications including BTecs, A-Levels and GCSEs as well as publishing support materials and offering technology products for schools, colleges and universities.

"As part of this work, we meet with teachers, education stakeholders and government representatives to discuss our plans and share ideas."

Mr Willetts also met a firm called Laureate, which has 55 higher education institutions in 27 countries. In England it runs online masters and doctoral degree courses accredited by the University of Liverpool.

A spokesman for the Department for Business, Innovation and Skills said its ministers complied with the rules regarding disclosure of their meetings.

"In the run-up to the publication of the higher education White Paper David Willetts spoke to higher education providers of all types," he added.

'Fraught with danger'

But Mr Gardiner, Labour MP for Brent North, said: "The fact that there have been at least 12 meetings just shows what the focus of the higher education minister is with private sector providers and undermining the existing public sector provision. This is not what he should be focusing on.

"These are not chance meetings; they are ideologically driven meetings about what this government sees as the future of higher education on this country.

"It is not a pretty sight and it is not what the British people recognise. They want to Americanise the system."

General secretary of the UCU lecturers' union Sally Hunt said: "Events in America have shown the for-profit model is fraught with danger for students and taxpayers alike.

"Rather than meeting with the privateers, we believe the government should tighten up existing regulations and abandon any proposals that would further encourage for-profit companies in the UK.

"The companies being sued and investigated by the US Congress are the very same ones who are now eyeing up the UK."

Thursday, September 22, 2011

For-profit colleges target veterans

New York Times

MILITARY personnel and their families are finding themselves under siege from for-profit colleges. A number of these schools focus on members of the armed forces with aggressive and often misleading marketing, and then provide little academic, administrative or counseling support once the students are enrolled.

Vast sums are involved: between 2006 and 2010, the money received in military education benefits by just 20 for-profit companies soared to an estimated $521.2 million from $66.6 million.

The government provides two important educational benefits to service members: the Tuition Assistance program for service members on active duty, and the G.I. Bill, which is mostly used for education after military service.

Today’s veterans are eager to earn post-secondary degrees — and to replicate the example of the generation that returned from World War II and fueled our prosperity. But their desire for learning is too often exploited by unscrupulous for-profit colleges.

The schools have a strong incentive to enroll service members and veterans, in large part because of the “90-10 rule” created by the 1998 amendments to the Higher Education Act. Put simply, the rule says that a for-profit college must obtain at least 10 percent of its revenue from a source other than Title IV education funds, the primary source of federal student aid. Funds from Tuition Assistance and the G.I. Bill are not defined as Title IV funds, so they count toward the 10 percent requirement, just like private sources of financing.

Therein lies a problem. For every service member or veteran (or spouse or child, in the case of the post-9/11 G.I. Bill) enrolled at a for-profit college and paying with military education funds, that college can enroll nine others who are using nothing but Title IV money.

This gives for-profit colleges an incentive to see service members as nothing more than dollar signs in uniform, and to use aggressive marketing to draw them in and take out private loans, which students often need because the federal grants are insufficient to cover the full cost of tuition and related expenses.

One of the most egregious reports of questionable marketing involved a college recruiter who visited a Marine barracks at Camp Lejeune, N.C. As the PBS program “Frontline” reported, the recruiter signed up Marines with serious brain injuries. The fact that some of them couldn’t remember what courses they were taking was immaterial, as long as they signed on the dotted line.

Some for-profit colleges have also created Web sites with military-sounding names. Although they present themselves as offering unbiased advice on G.I. Bill benefits, some are using deceptive methods to bring in students.

For example, I looked at one of these sites and found that the schools listed on the home page as “G.I. Bill schools” all happened to be for-profit colleges. On another site, a member of my staff filled out an application asking what the school would recommend if he had a law degree and a postdoctoral degree in physics. Their suggestion: get a vocational certificate at a local for-profit college.

To be sure, there are some for-profit colleges with a long record of serving the military, solid academic credentials and a history of success for their graduates. But, compared with other schools, for-profit colleges generally have low graduation rates and a poor record of gainful employment for their alumni.

A number of for-profit colleges have questionable academic credentials or lack accreditation accepted by other institutions. This makes it very difficult for students to transfer credits to other schools. Not surprisingly, for-profit colleges also tend to have a higher-than-average student loan default rate, which means that, in the end, the college experience there may hinder, rather than help, the careers and financial prospects of their graduates.

Prior to the Military Lending Act of 2007, which capped the annual interest rate for some consumer loans to service members at 36 percent, they were victims of unchecked payday lending and other predatory financial services. I see a parallel in what is happening today with for-profit colleges.

As long as military education funds are on the 10 percent side of the 90-10 rule, service members will be a lucrative target for exploitation. As Congress explores legislative solutions at a hearing today, it is critical that federal agencies redouble efforts to prevent aggressive and deceptive practices. The benefits provided to our military and their families should not be wasted on programs that do not promote — and may even frustrate — their educational goals.

Hollister K. Petraeus is the assistant director for service member affairs at the Consumer Financial Protection Bureau. Her husband, David H. Petraeus, is the director of the C.I.A. and a retired Army general who commanded American forces in Iraq and Afghanistan.

Tuesday, September 13, 2011

Student default rates soar at for-profit colleges

The proportion of borrowers defaulting on federal student loans continued to increase during the Great Recession, according to Education Department data released Monday.

The two-year "cohort" default rate, which represents the proportion of federal loan borrowers who entered repayment between October 2008 and September 2009 and had defaulted on their loans by the end of September 2010, increased to 8.8 percent, the highest such rate since 1997. The rate increased 1.8 percentage points from fiscal 2008.

While students in all sectors were likelier to default on their loans than they had been the previous year, defaults increased the most at for-profit colleges: 15 percent of borrowers from those institutions defaulted in 2009, compared with 11.6 percent in 2008. That was more than twice the rate at public and not-for profit private institutions. Critics have compared for-profit colleges' exhorbitant tuitions and the huge federal loans students take out to pay them to the sub-prime mortgage bubble that led to the Great Recession.  

Defaults increased to 7.2 percent at public institutions, from 6 percent in the 2008 fiscal year. At private institutions, the default rate increased from 4 percent in 2008 to 4.6 percent in 2009.

The rates are the first to consist entirely of loans that entered repayment during the worst of the economic downturn, and Education Department officials pointed to the bad economic situation as a major factor in the increase in defaults. Defaults tend to increase as unemployment rises, and delinquency rates on other types of credit, such as mortgages and credit cards, increased during the same period, they said.

But officials also pointed to booming enrollments at for-profit colleges as a contributing factor. Default rates have historically been higher for students at for-profit institutions. Nearly half of the 320,000 defaulting borrowers who began repayment in fiscal 2009 were enrolled at for-profit colleges, said James Kvaal, the deputy undersecretary for education, during a conference call with reporters.

Since fiscal year 2005, default rates over all have nearly doubled, from 4.6 percent in 2005 to 2009’s 8.8 percent. Still, default rates are far from their peak in 1990, when 22.4 percent of students defaulted on their loans and the Education Department shut down dozens of programs.

The department cautioned that the actual default rate may in fact be higher, because many colleges encourage their students to seek forbearance or defer payments rather than go into default. While that sometimes can help students repay their loans, in many cases it just delays the default beyond the two-year window, Kvaal said. The Project on Student Debt called Monday’s figures “the tip of the iceberg,” noting that most defaults occur after two years.

Next year, the department will begin using three-year default rates to evaluate programs, meaning that the rate will increase. Trial three-year default rates for 2009 will be released in spring 2012.

Five institutions, four of them for-profits, will lose eligibility for federal student loans due to high default rates: Tidewater Technical, in Norfolk, Va.; Trend Barber College in Houston; Missouri School of Barbering and Hairstyling in St. Louis; Sebring Career School, in Houston, and Human Resource Development and Employment-Stanley Technical Institute, in Clarksburg, W.V. Institutions must have default rates that exceed 40 percent in one year or 25 percent for three consecutive years to incur sanctions.

Wednesday, September 7, 2011

Culinary school graduates claim they were ripped off, sue to get their money back

SAN FRANCISCO - Food enthusiasts have been enrolling in culinary school in growing numbers, lured by dreams of working as gourmet chefs or opening their own restaurants.

For many graduates, however, those dreams have turned into financial nightmares, as they struggle to pay off hefty student loans and find work in a cutthroat industry known for its long hours and low pay.

Now, some former students are suing for-profit cooking schools to get their money back, saying they were misled by recruiters about the value of culinary education and their job prospects after graduation.

"They just oversold it and pushed it. They made misleading statements to lure you in," said Emily Journey, 26, a plaintiff in a class-action lawsuit against San Francisco's California Culinary Academy, part of Career Education Corp.'s chain of 16 Le Cordon Bleu cooking schools.

Journey, however, may get some of her money back. Under a pending $40 million settlement in state court, Career Education has agreed to offer rebates up to $20,000 to 8,500 students who attended the academy between 2003 and 2008.

In 2004, Journey was a recent high school graduate, dreaming of opening her own bakery, when she enrolled in a 7-month program in pastry and baking arts at the San Francisco school. Recruiters convinced her it was a worthwhile investment and helped her borrow $30,000 to pay for it.

After finishing the program, the only job she could find paid $8 an hour to work the night shift at an Oregon bakery — "something anyone could have gotten without a culinary certificate," she said.

Journey, who now lives in Bakersfield, has abandoned her baker's dream and now plans to attend community college to become a nurse or dietitian. Without the settlement money, she will be paying for that culinary certificate for another 15 years.

"Was it worth the money and the time to have this loan hanging over my head?" she asked. "Absolutely not."

Two other Le Cordon Bleu schools — the California School of Culinary Arts in Pasadena and the Western Culinary Institute in Portland — also face lawsuits from former students who say they were duped by deceptive advertising, particularly the schools' job placement rates.

Schaumburg, Ill.-based Career Education denies its recruiting and marketing practices are illegal, but its schools recently changed their policies to "ensure that students understand that we are not promising any specific job outcomes or salaries," said spokesman Mark Spencer.

The publicly traded company, which operates more than 90 career colleges worldwide, agreed to settle the San Francisco lawsuits because they were too expensive to litigate and distracting to employees, Spencer said.

Enrollment at for-profit colleges and trade schools has surged over the past decade, fueled by federal student aid that makes up as much as 90 percent of revenue at many institutions. Profit-driven career colleges are facing heavy criticism for their aggressive recruiting and marketing practices, as well as their graduates' low rates of loan repayment.

Students who attend for-profit institutions represented 12 percent of all college students in 2009, but 43 percent of those who defaulted on federal student loans, according to a recent report by The Education Trust, an education advocacy group.

"It's a business predicated on volume, not quality. How many students can you get to sign on the dotted line?" said Jose Cruz, the group's vice president for higher education policy. "It's a debt that takes over their financial life."

Career Education has capitalized on the growing interest in culinary education, fed by popular television shows such as the Food Network's "Iron Chef," Fox Broadcasting's "Hell's Kitchen" and Bravo's "Top Chef."

Enrollment at the company's 16 Le Cordon Bleu cooking schools increased from 8,400 in 2008 to 13,100 in 2010, according to Career Education officials.

Le Cordon Bleu officials defend the value of a culinary education, saying many restaurants, hotels and hospitality companies don't have the time or money to train employees.

"Culinary arts education today gives people a much-needed foundation they need to be successful," said Edward Leonard, vice president and corporate chef for Le Cordon Bleu Schools in North America.

School officials point to alumni such as Jill Barton, a 2005 California Culinary Academy graduate who recently opened a crepe shop in Santa Barbara, or Gonzalo del Castillo, a 2007 graduate who co-owns a San Francisco tapas bar.

The academy's tuition and fees range from $21,000 for a certificate in pastry and baking arts to $43,000 for an associate's degree in culinary arts. Those costs don't include books, supplies, or room and board.

The school's website says 48 to 100 percent of graduates find work in their field of study or a related field, depending on the program or methodology.

Critics say many of those jobs don't pay much more than minimum wage and don't require formal culinary education.

"It is a ridiculous business decision to attend one of these schools," said attorney Ray Gallo, who represents plaintiffs suing the California Culinary Academy. "The whole thing doesn't make economic sense. They know it and they don't tell you."

In June, the U.S. Department of Education in June issued new regulations aimed at protecting students who attend private career colleges. Under the new rules, a school can only have access to federal student aid if at least 35 percent of its graduates are repaying their loans — or if graduates' annual loan payments don't exceed 12 percent of their earnings.

Critics say the new rules are a small step in the right direction, but don't go far enough.

"Unfortunately, it's really a buyer-beware environment for people seeking higher education at culinary schools or other kinds of training programs," said Lauren Asher, who heads the nonprofit Institute for College Access and Success.

Matt Foist, 46, regrets his decision to borrow $45,000 to attend the California Culinary Academy in 2005, when the Silicon Valley software engineer was looking for a career change.

"They did a great job of selling it to me," Foist said. "I was kind of tricked into believing that I would become a highly regarded chef in the San Francisco area and that I would make a lot more money than the reality turned out to be."

After realizing he wouldn't be able to earn enough to cover his student loans, he decided to stick with software engineering. Five years later, he said he's barely made a dent in paying off his culinary school debt, though the settlement money will help if it comes through.

His advice to people contemplating culinary school: "Don't go. Go to a community college."

Saturday, September 3, 2011

In honor of Teachers

New York Times, September 3, 2011

Since it’s back-to-school season across the country, I wanted to celebrate a group that is often maligned: teachers. Like so many others, it was a teacher who changed the direction of my life, and to whom I’m forever indebted.

A Phi Delta Kappa/Gallup poll released this week found that 76 percent of Americans believed that high-achieving high school students should later be recruited to become teachers, and 67 percent of respondents said that they would like to have a child of their own take up teaching in the public schools as a career.

But how do we expect to entice the best and brightest to become teachers when we keep tearing the profession down? We take the people who so desperately want to make a difference that they enter a field where they know that they’ll be overworked and underpaid, and we scapegoat them as the cause of a societywide failure.

A March report by the McGraw-Hill Research Foundation and the Organization for Economic Cooperation and Development found that one of the differences between the United States and countries with high-performing school systems was: “The teaching profession in the U.S. does not have the same high status as it once did, nor does it compare with the status teachers enjoy in the world’s best-performing economies.”

The report highlights two example of this diminished status:

• “According to a 2005 National Education Association report, nearly 50 percent of new teachers leave the profession within their first five years teaching; they cite poor working conditions and low pay as the chief reason.”

• “High school teachers in the U.S. work longer hours (approximately 50 hours, according to the N.E.A.), and yet the U.S. devotes a far lower proportion than the average O.E.C.D. country does to teacher salaries.”

Take Wisconsin, for instance, where a new law stripped teachers of collective bargaining rights and forced them to pay more for benefits. According to documents obtained by The Associated Press, “about twice as many public schoolteachers decided to hang it up in the first half of this year as in each of the past two full years.”

I’m not saying that we shouldn’t seek to reform our education system. We should, and we must. Nor am I saying that all teachers are great teachers. They aren’t. But let’s be honest: No profession is full of peak performers. At least this one is infused with nobility.

And we as parents, and as a society at large, must also acknowledge our shortcomings and the enormous hurdles that teachers must often clear to reach a child. Teachers may be the biggest in-school factor, but there are many out-of-school factors that weigh heavily on performance, like growing child poverty, hunger, homelessness, home and neighborhood instability, adult role-modeling and parental pressure and expectations.

The first teacher to clear those hurdles in my life was Mrs. Thomas.

From the first through third grades, I went to school in a neighboring town because it was the school where my mother got her first teaching job. I was not a great student. I was slipping in and out of depression from a tumultuous family life that included the recent divorce of my parents. I began to grow invisible. My teachers didn’t seem to see me nor I them. (To this day, I can’t remember any of their names.)

My work began to suffer so much that I was temporarily placed in the “slow” class. No one even talked to me about it. They just sent a note. I didn’t believe that I was slow, but I began to live down to their expectations.

When I entered the fourth grade, my mother got a teaching job in our hometown and I came back to my hometown school. I was placed in Mrs. Thomas’s class.

There I was, a little nothing of a boy, lost and slumped, flickering in and out of being.

She was a pint-sized firecracker of a woman, with short curly hair, big round glasses set wider than her face, and a thin slit of a mouth that she kept well-lined with red lipstick.

On the first day of class, she gave us a math quiz. Maybe it was the nervousness of being the “new kid,” but I quickly jotted down the answers and turned in the test — first.

“Whoa! That was quick. Blow, we’re going to call you Speedy Gonzales.” She said it with a broad approving smile, and the kind of eyes that warmed you on the inside.

She put her arm around me and pulled me close while she graded my paper with the other hand. I got a couple wrong, but most of them right.

I couldn’t remember a teacher ever smiling with approval, or putting their hand around me, or praising my performance in any way.

It was the first time that I felt a teacher cared about me, saw me or believed in me. It lit a fire in me. I never got a bad grade again. I figured that Mrs. Thomas would always be able to see me if I always shined. I always wanted to make her as proud of me as she seemed to be that day. And, she always was.

In high school, the district sent a man to test our I.Q.’s. Turns out that not only was I not slow, but mine and another boy’s I.Q. were high enough that they created a gifted-and-talented class just for the two of us with our own teacher who came to our school once a week. I went on to graduate as the valedictorian of my class.

And all of that was because of Mrs. Thomas, the firecracker of a teacher who first saw me and smiled with the smile that warmed me on the inside.

So to all of the Mrs. Thomases out there, all the teachers struggling to reach lost children like I was once, I just want to say thank you. You deserve our admiration, not our contempt.

Wednesday, August 31, 2011

U.S. corporations and CEOs game the system

A new study by the Institute for Policy Studies reports that at least 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes.

The companies — which include household names like eBay, Boeing, General Electric and Verizon — averaged $1.9 billion each in profits. Rather than paying taxes these firms each received more than $400 million in tax rebates.

The authors of the study, which examined the regulatory filings of the 100 companies with the best-paid chief executives, said that their findings suggested that current United States policy was rewarding tax avoidance rather than innovation.

“We have no evidence that C.E.O.’s are fashioning, with their executive leadership, more effective and efficient enterprises,” the study concluded. “On the other hand, ample evidence suggests that C.E.O.’s and their corporations are expending considerably more energy on avoiding taxes than perhaps ever before — at a time when the federal government desperately needs more revenue to maintain basic services for the American people.”

It is outrageous that Republicans, like Wisconsin Senator Ron Johnson, are demanding huge cuts in federal discretionary spending, cuts to education, health care, research and development, local governmental services such as police and fire protection, and emergency federal disaster relief while they allow U.S. corporation's to manipulate the tax system to avoid contributing their fair share and reward CEO's with unconscionable salaries that have no relationship to performance.

The NY Times article is linked here. 

Monday, August 29, 2011

US Federal debt increases by U.S Presidents

Thursday, August 11, 2011

U. S. Department of Justice sues nation's 2nd largest for-profit college

The Department of Justice and four states on Monday filed a multibillion-dollar fraud suit against the Education Development Management Corporation (EDMC), the nation’s second-largest for-profit college company, charging that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.

An EDMC subsidiary,the Art Institute of Wisconsin, recently began operations in Milwaukee's Third Ward, in close proximity to the Milwaukee Institute of Art and Design (MIAD). It is one of several for-profit colleges, including the notorious Everest College, that have recently opened branches in the city.

The Art Institute of Wisconsin anchored a controversial development that received $6.5 million in federal New Market tax credits from the Milwaukee Economic Development Corporation. I had written a letter in opposition to subsidizing this development with New Market tax  credits because they are designed to promote development in poor communities, not gentrified areas like the Third Ward, and because of the large number of lawsuits against EDMC alleging unscrupulous business practices.

While the civil lawsuit filed earlier this week is one of many raising similar charges against the expanding for-profit college industry, the case is the first in which the government intervened to back whistle-blowers’ claims that a company consistently violated federal law by paying recruiters based on how many students it enrolled. The suit said that each year, Education Management falsely certified that it was complying with the law, making it eligible to receive student financial aid.

“The depth and breadth of the fraud laid out in the complaint are astonishing,” said Harry Litman, a lawyer in Pittsburgh and former federal prosecutor who is one of those representing the two whistle-blowers whose 2007 complaints spurred the suit. “It spans the entire company — from the ground level in over 100 separate institutions up to the most senior management — and accounts for nearly all the revenues the company has realized since 2003.”

Education Management, which is based in Pittsburgh and is 41 percent owned by Goldman Sachs, enrolls about 150,000 students in 105 schools operating under four names: Art Institute, Argosy University, Brown Mackie College and South University.

For more information go to this link.

August 9th elections: a step forward

The New York Times analyzes Wisconsin's recall elections writing: "...voters around the country who oppose the widespread efforts to undermine public unions — largely financed by corporate interests — should draw strength from Tuesday’s success, not discouragement."

" Republicans will not admit this, but the numbers showed significant strength for Democrats even in the districts they lost — strength that could grow if lawmakers continue cutting spending and taxes while reducing the negotiating rights of working families. In one rural senatorial district that had not elected a Democrat in a century, the Democratic candidate reached 48 percent of the vote. Another race was also close, and as Nate Silver noted in The Times, the overall results suggest that a contemplated statewide recall of Mr. Walker himself would be too close to call. (Two Democrats face recalls next week.)"

The editorial is linked here.

Friday, July 29, 2011

Politifact: Walker's job claim is false!

The Milwaukee Journal Sentinel's Politifact has analyzed Walker's fictitious job creation boast that Wisconsin created half the nation's new jobs in June and labeled it false.

The MJS analysis is linked here.

Thursday, July 28, 2011

Walker denies jobs boast even as allies repeat it

Less than a week after Governor Scott Walker claimed that Wisconsin had created half the nation's new jobs, he has denied making the statement.

The Wausau Daily Herald reports"Walker said it was never his intention to draw a direct line between the Wisconsin total and the national total."

"We made it very clear at our announcement that (our number) was not half of all the jobs out there, though it is an interesting parallel," he said.

That's not what the Milwaukee Journal Sentinel's economics reporter John Schmid reported. Schmid wrote of the Walker's announcement:

"Walker noted that job growth in Wisconsin effectively accounted for about half of the new jobs in the nation in June, an abysmal month for job creation.

The state had a net total of 9,500 new jobs in the month, because a decline in government employment offset some of the gains in the private sector. Nationally, Walker said, 18,000 new jobs were created last month - 57,000 gained in the private sector minus a drop of 39,000 in government payrolls.

"It's incredibly important to put that in perspective," Walker said. "To have 9,500 net new jobs in the state at a time when the country saw just 18,000 net new jobs all across the country is incredibly good news..."

While Walker may be denying his earlier statement, others are not. As Bill Cristofferson reported in his blog, conservative James Wigderson mounted a spirited, if convoluted, defense of Walker while attacking Christofferson and me for questioning Walker's numbers.

More importantly, Walker's claim has become the newest Republican talking point.

At a town hall meeting in Whitefish Bay, Congressman James Sensenbrenner bragged that Wisconsin had created half the nation's new jobs in June and attributed this to Walker's economic policies.

U.S. Senator Ron Johnson repeated Sensenbrenner's and Walker's boast on national TV as did Assembly Majority Leader Rep. Scott Suder, R-Abbotsford, who bragged: "Accounting for more than half of the nationwide gain in June employment is a remarkable feat."

The same echo will will undoubtedly be heard in Madison over the next few weeks.

As I wrote earlier Walker used a misleading statistic to create a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program. 

Others have now picked up Walker's ball and are running with it. Rather than deny the truth about what he said, Walker ought to man up, admit he was wrong and actually do something to help the tens of thousands of Wisconsinites who are unemployed.

Wednesday, July 27, 2011

Gov. Walker's victory dance misses the beat

Last week Governor Walker claimed that Wisconsin was responsible for half the nation’s monthly job growth.

Republican Party politicians and operatives have run with Walker’s numbers, arguing they prove that his program of corporate and investor tax cuts and reduced regulation is working.

Let’s put Walker’s jobs victory dance iin perspective.

Several states; Texas (+32,000), California (+28,800), Michigan (+18,000), Minnesota (+13,200) and Massachusetts (10,400) had more job growth than Wisconsin

Using the Bureau of Labor Statistics data Walker touted, Texas was responsible for almost 200% of net job growth in June, California 150%, Michigan 100%, Minnesota 65% and Massachusetts slightly more than 50% .Nor was Wisconsin’s monthly percentage increase among the nation’s largest. Alaska experienced the largest over-the-month percentage increase in employment (+1.7 percent), followed by North Dakota (+1.2 percent), Vermont (+0.9 percent), and South Dakota (+0.8 percent).

In fact, Wisconsin was one of only 9 states that reported statistically significant over-the-month unemployment rate increases in June.

South Carolina experienced the largest increase (+0.5 percentage point), followed by Alabama, Arkansas, and Illinois (+0.3 point each) and Maryland, Montana, North Carolina, Texas, and Wisconsin (+0.2 point each). The unemployment rate did not increase in 41 states.

 Wisconsin lost nearly 171,000 jobs during the Great recession. It has gained back 50,000 over the last year and a half, about 30%.

These numbers illustrate what a useless, misleading and politically motivated statistic Governor Walker and DWD used in claiming half the nation’s job growth.

It is useless, misleading and politically motivated because it creates a distorted perception of the state’s job creation record for overtly political purposes-promoting Walker and his economic program.

More importantly, there is ZERO evidence that Wisconsin’s June job growth has anything to do with anything that Governor Walker or the current legislature has done. Economists recognize that there are lags between the adoption of economic policy, its implementation and the policy’s impact. Given the reality of policy lags, there has simply not been enough time for Walker’s initiatives to have had the impact that the Walker administration claims.

The creation of 9,500 jobs is a positive development. But it hardly justifies the Governor’s jobs victory dance.

Thursday, July 21, 2011

For-Profit College CEOs Reap Rewards of Weak Regulation

In the six weeks since the Obama administration issued weaker-than-expected rules governing student debt at for-profit colleges, the University of Phoenix's founder and executive board chairman has cashed out more than $59 million of the school's parent company’s stock, according to filings with the Securities and Exchange Commission. The company's share prices on Wall Street have climbed to the highest levels in more than six months.

John G. Sperling's sale of 1.8 million shares comes as the stocks at many for-profit college companies have surged in the wake of the Department of Education's issuance of "gainful employment" rules, which the for-profit college industry had been aggressively fighting for more than a year.

And Sperling isn't alone. Donald Graham, the main stakeholder in Kaplan University, reaped a gain of $12.5 million over the last month. Andrew Clark, the CEO of Bridgepoint Education, made a $2.5 million profit on his stock holdings. Dennis Keller of Devry University made $27.6 million.

In total, the CEOs of the 15 publicly traded American for-profit colleges have collected $2 billion from selling company stock over the last seven years.
Many for-profit schools have been shown to aggressively recruit low-income and minority studentsin some cases providing false information about accreditation and the prospects for salary and job opportunities after graduationraising the question of whether the recent gains of for-profit CEOs like Sperling are being made on the backs of the most vulnerable students.

As enrollments at for-profit colleges have swelled over the past decade, along with the federal financial aid dollars that deliver as much as 90 percent of their revenues, scrutiny has intensified on students' outcomes. Hundreds of thousands of students at for-profit colleges have emerged with enormous debts and meager job prospects, resulting in a disproportionate share of student loan defaults at for-profit colleges.

The Obama administration's new rules were expected to rein in schools that aggressively recruited students but did little for their academic and employment outcomes once they were in the door. Many industry executives and Wall Street investors anticipated stricter rules that could have barred certain underperforming programs from accessing lucrative federal student aid dollars.

Beginning last summer, when the Department of Education released a draft version of the regulations, stocks at the Apollo Group, the University of Phoenix's parent company, and many other higher education corporations began to tumble. But the resulting rules essentially gave the industry carte blanche to continue as usual, taking a more lenient approach that gives schools an additional three years to come into federal student aid compliance. One former Department of Education official said the administration "caved in" to the industry’s pressure.

The market certainly signaled that the rules changed little, as stocks at many of those schools' parent companies soared and have remained strong ever since.

The weakening of the rules came after an extensive yearlong battle in Washington waged by the for-profit college industry that included substantial lobbying and campaign finance money from the Apollo Group and Sperling himself.

Tuesday, July 19, 2011

18 State Attorneys General Investigating For-Profit Colleges

The Kentucky News Democrat & Leader recently published an op-ed by the Attorney General of Kentucky, Jack Conway, in which he discusses his investigation into seven for-profit colleges.

State investigations have picked up speed in the past several months. 18 states are now engaged in a joint effort, led by Conway, to examine industry abuses. (Earlier this year, news reports said that eleven state attorneys general were part of this effort, so it clearly is growing.) That is an encouraging development in the face of continued industry opposition to accountability.

Since the investigation began late last year, Conway’s efforts have, unsurprisingly, been met with opposition by the for-profit schools in the state, which have likened his investigation to “an assault.”

“Quite frankly, the industry’s response to our investigation has been very disappointing,” says Conway. “For-profit schools should acknowledge and work to correct the well-documented issues involving high student loan default rates, overaggressive recruiting practices, misleading advertising and high student withdrawal rates.”

Despite the somewhat diluted nature of the final gainful employment rule issued by the Department of Education in early June, opponents of gainful employment have not let up their fight. Just last week, the House Subcommittee on Education and Workforce Training held a hearing not-so-subtly titled “The Gainful Employment Regulation: Limiting Job Growth and Student Choice."The hearing, chaired by Rep. Virginia Foxx (R-NC saw testimony from several witnesses, including head of the National Black Chamber of Commerce Harry Alford – who called the gainful employment rule ‘racial’ and ‘evil’ in an op-ed last week – Dr. Dario A. Cortes, the President of New York for-profit Berkeley College, and student Karla Carpenter, who appeared in an advertisement for the Association of Private Sector Colleges and Universities (APSCU) one of the biggest opponents of reform.

For-profit colleges spent millions of dollars on advertising and high-powered lobbyists in an attempt to weaken or squash outright the gainful employment regulations. It remains to be seen how much more money and manpower they will pour into such efforts in the coming months. 

The information in this blog came from a post by Katie Andriulli/ Campus Progress.Org, July 11, 2011.
Katie is the Communications and Outreach Manager for Campus Progress.

Sunday, July 17, 2011

Dollars for Afghanistan; pink slips for Americans

The New York Times  writes:

All across America, school budgets are being cut, teachers laid off and education programs dismantled...

And he asks: How is it that we can afford to double our military budget since 9/11, can afford the carried-interest tax loophole for billionaires, can afford billions of dollars in givebacks to oil and gas companies, yet can’t afford to invest in our kids’ futures?

Sometimes I hear people endorse education cuts by arguing that “school isn’t for everybody,” which usually means something like “education isn’t for other people’s children” — or that farm kids in places like Yamhill really don’t need schools that double as rocket ships. I can’t think of any view that is more un-American.

The column is linked here.

Monday, July 11, 2011

Technical education faces federal funding cuts

The New York Times reports that federal funding for technical education is on the chopping block as the Obama administration focuses education policy on increasing the number of four-year college graduates.

This is a disturbing development because:

  • 70% of all new jobs will require some post-secondary education, but not a four-year degree;
  • four year colleges and universities are increasingly becoming too expensive for low and moderate income students;
  • many students find technical colleges' hands-on education better suited to their learning styles;
  • as baby boomer retire there will be a shortage of middle skills workers, the very skilled and technical workers that technical colleges produce and business and industry needs;
  • as public technical colleges reduce programs in response to budget cuts, students will gravitate to the highly exploitative for-profit college sector.
The New York Times article is linked here.

Friday, July 1, 2011

Republicans twiddle their thumbs while the unemployed lose their benefits

Milwaukee's Democratic legislators have written a letter asking the legislature's majority leaders to call a special session to enact legalisation enabling Wisconsin to secure $89 million in federal extended unemployment benefits.

10,000 unemployed workers in the state have run out of unemployment insurance benefits because of the legislature's failure to act.

Two weeks ago the New York Times wrote that Wisconsin and Arizona were among a handful of states that were refusing to accept federal aid for "ideological reasons." A Wisconsin Manufacturer's and Commerce (WMC) spokesman claimed that the extended benefits were unnecessary and discouraged the unemployed  from seeking work.

The Milwaukee Journal Sentinel followed up the Times' expose with a front page article that reported that Governor Walker supported extending the benefits, but did think they would create jobs, an unsubstantiated declaration that contradicts economic research that concludes extending unemployment benefits is among the strongest job creating policies governments can implement.

Following a demonstration in front of her legislative office earlier this week, State Senator Alberta Darling, co-chair of the powerful joint finance committee, claimed that she supported taking the money and assisting the unemployed.

Yet neither Darling, the Fitzgerald brothers nor Governor Walker have taken any steps to secure the $89 million that would not cost the state a single penny.

Their lack of urgency stands in sharp contrast to their actions immediately after Walker assumed office when they convened a special session to enact approximately $140 million in tax breaks for corporations and investors..

The failure of Darling, Walker and the Fitzgeralds to act is an outrage and immoral.

More than 10,000 hard-working, tax-paying Wisconsinites who lost their jobs through no fault of their own have run out of benefits. Many have lost their homes or are at risk of losing them. Others have been forced to drop out of school diminishing their hope for reemployment through retraining.

Wisconsin has a jobs shortage. Nationally there are 4.6 job seekers for every job.

It is time for Darling, Walker and the GOP to put up or shut up.

Call a special session immediately or justify your refusal to accept the federal money to the public and the state's unemployed.

Thursday, June 23, 2011

Walker & Darling cruelly betray Wisconsin's hard working people

It is outrageous that 10,000 unemployed Wisconsinites have lost their unemployment compensation benefits because Governor Scott Walker and Joint Finance Committee co-chair Alberta Darling have done nothing to collect $89million in federally funded jobless benefits.

All that is required to secure these federal dollars and provide extended benefits to the unemployed is a small change in state law.  The change would have absolutely no impact on the state's struggling unemployment insurance trust fund or the state's deficit. But it would provide 13 more weeks of benefits to workers who have been without employment for roughly a year and a half and promote economic growth and job creation in the state.

While refusing the $89 million in federal extended unemployment benefits, Walker and Darling have led the legislature in passing legislation forcing the unemployed to wait a week before becoming eligible for unemployment which will take $50 million out of their pockets and the Wisconsin economy.

Why haven’t Walker and Darling who campaigned on a platform of jobs, jobs, and more jobs and orchestrated almost $600 million in corporate and investor tax breaks in this budget acted?

The New York Times suggested they were refusing the money because of ideological reasons. And that certainly is one factor. But another is that both of these career politicians are the agents of the Wisconsin corporate community that wants to use the jobless recover to drive down wages of Wisconsin’s working people by forcing the unemployed to accept any job at any wage in an unforgiving labor market.

Despite skilled labor shortages in certain sectors, Wisconsin, like the nation, has a jobs deficit, not a labor shortage. According to the Bureau of Labor Statistics Wisconsin has 126,000 fewer jobs than it did before the recession began. Nationally there are 4.6 workers for every job. Wisconsin’s numbers mirror the nation.

Yet some Wisconsin business leaders think that Wisconsin’s unemployed workers would rather sit at home and collect unemployment checks than work.

They are dead wrong.

Over the past year, the Wisconsin unemployment rate has inched downwards by 1.4 percentage points. But this decline can be explained in part by some workers dropping out of the labor force as they have become discouraged by prolonged unemployment. As a result they are no longer considered unemployed. Just last month professional services, financial firms, restaurants, hotels, and city and county governments cut jobs. More job cuts are on the way as a result of the cuts in state aid for public schools and local government.

Walker claims that the $89 million won’t create jobs. On this he is dead wrong. Mark Zandi, an economist who works for both political parties, has documented that extending unemployment benefits is one of the most effective policies government can employ to promote economic growth and job creation. Its economic impact of 1.63 is almost five times greater than cutting corporate taxes or capital gains taxes, policies both Walker and Darling have pushed through the legislation.

Extending unemployment benefits is good economic policy. It is also the decent thing to do.

Literally thousands of hard-working, tax- paying Wisconsin workers and their families have lost their jobs through no fault of their own. They want to work and cannot find work. Many have lost their homes or are in danger of losing their homes. It is not only bad for the economy to deny the unemployed these benefits it is also a cruel betrayal of Wisconsin’s values and the state’s hard-working people.It is in a word immoral!