U.S. to Join Suit Against For-Profit College Chain

The Justice Department plans to intervene in a whistle-blower lawsuit charging that one of the nation’s largest for-profit college companies, the Education Management Corporation (EDMC), defrauded the government by illegally paying recruiters based on the number of students they enrolled, according to a Securities and Exchange Commission filing on Monday.

An EDMC affiliated college, 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 Everest College, that have recently opened branches in the city.

The Art Institute 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.

The Security and Exchange Commission filing by Education Management, known as EDMC, said “several states” also planned to join in the False Claims Act case, in federal court in Pittsburgh, alleging violations of their state laws.

According to the New York Times' Tamar Lewin:

This is the first time prosecutors have joined such a case, one of dozens in recent years that accuse the for-profit college industry of illegal practices devised to increase federal student aid revenue.


The company, which enrolls nearly 150,000 students, operates several career-college chains, including the Art Institute, Argosy University, Brown Mackie College and South University.


EDMC, 40 percent of which is owned by Goldman Sachs, said in its securities filing that its compensation plan for recruiters did not violate the law, and that it would “vigorously defend itself.”


In federal whistle-blower, or qui tam, suits filed under the False Claims Act, private citizens file fraud complaints on behalf of the federal government, seeking to recover public money that was wrongly paid out. The lawsuits are filed under seal, giving the government an opportunity to investigate and decide whether to intervene, so the one against EDMC has yet to be made public.


Some such suits have been settled for significant amounts of money. In 2009, Apollo Group, which operates the University of Phoenix, the largest chain of for-profit colleges, agreed to pay $78.5 million to settle one.


For-profit schools enroll about 12 percent of the nation’s higher-education students yet receive about a quarter of all federal student aid; their students account for almost half of all defaults. In general, these institutions get more than 80 percent of their revenues from federal student aid.


The United States Department of Education and Senator Tom Harkin, an Iowa Democrat who is the chairman of the Health, Education, Labor and Pensions Committee, have become concerned in recent years that such colleges too often leave their students with mountains of debt and no marketable job skills.


The Education Department has taken action to rein in abuses by the for-profit sector but has so far delayed the most controversial regulation it has proposed, the “gainful employment” rule that would cut off federal aid to programs whose graduates have high debt loads and not enough income to pay them.


The for-profit schools are lobbying intensely against the rule, and last week more than 100 members of Congress wrote to President Obama asking that his administration drop the gainful employment rule, which they say would cut off access to higher education for many poor minority students.

Supporters of the rule say it would not harm poor students but rather protect them from taking out large loans to enroll in expensive programs that would not lead to good jobs.

Is Walker planning to raid public employee pensions?

A new study by the Pew Center on the States reports that Wisconsin public employee pension system is one of only two in the nation that is fully funded and that the state is a leader in managing its liabilities for both pension and health benefits over the long term.

Given the health of the Wisconsin Retirement System (WRS), Eli Lehrer, vice president of the conservative Heartland Institute, advised Governor Walker  to focus his budget balancing effort elsewhere.

But Walker doesn't appear to be heeding Lehrer's sound advice.

On page three of Walker's budget repair bill, there is language that mandates that a study of the existing WRS be performed and that it must “specifically address establishing a defined contribution plan as an option for WRS participating employees.” The mandate even includes a deadline for completing this study, June 30, 2012.

So if the Wisconsin public employee pension fund is well managed and fully funded, why does Walker's budget repair bill include organizing a group to study it?

Because as the notorious bank robber Willie Sutton said when asked why he robbed banks, that's where the money is. 

For profit colleges spend massively to defeat regulations

The for-profit higher education industry spent $8.1 million on lobbying activities in 2010, up from $3.3 million the year before, according to an analysis by The Huffington Post of data from the Center for Responsive Politics.

Corinthian College which owns Everest College, the controversial tech school with among the nation's highest student loan default rates, led the way, spending $1.28 million on lobbying. Everest opened a branch in Milwaukee earlier this year despite the opposition of several Common Council members including the district's Alderwoman, Melele Coggs, the Hillside Neighborhood Association, the NAACP, AFT Local 212, Voces de la Frontera and several student organizations.

The Huffington Post emphasized the sharp increase in such spending took place at the same time that the U.S. Department of Education is attempting to regulation for-profit colleges. But Harris Miller, president of the Association of Private Sector Colleges and Universities, said that the lobbying was "not unique in any sense," comparing it to "...Boeing or defense contractors using their money to promote an agenda, which is to win a contract of the U.S. government."

The entire article is linked here.

Ryan's proposal will increase inequality and the deficit

Wisconsin Congressman Paul Ryan and other deficit hawks are using scare tactics to achieve the long held Republican goal of dismantling Medicare and Medicaid and other social programs. Social Security cannot be far behind.

His budget bill would end the guarantee provided by Medicare and Medicaid to the elderly and the poor, which has been provided by the federal government with society’s clear assent since 1965. The elderly, in particular, would be cut adrift by Mr. Ryan. People now under 55 would be required to pay at least $6,400 more for health care when they qualified for Medicare, according to the Congressional Budget Office.

 Fully two-thirds of his $4.3 trillion in budget cuts would come from low-income programs.It would:

• cut food stamps by $127 billion, or 20 percent, over the next 10 years, increasing hunger among the poor. 
• cut Pell grants for all 9.4 million student recipients next year, removing as many as one million of them from the program altogether.
• remove more than 100,000 low-income children from Head Start
• slash job-training programs for the unemployed desperate to learn new skills.

Ryan's analysis that profligate spending on the poor and middle class is bankrupting America is a lie.

Only a decade ago the United States was running a surplus projected to be $5.2 trillion over ten years.

The current and projected deficits are largely the product of Bush era tax cuts (1.65 trillion that went mainly to the super rich) two wars ($1 trillion and counting) and the Great Recession which was caused by the Republican's manic pursuit of financial deregulation. See the graph and youtube video below for more details.

Ryan supported every single one of these deficit driving policies making his concern over the deficit impossible to swallow.

Ryan also proposes $2.9 trillion in tax cuts by lowering tax rates for the rich and corporations. People with incomes over $1 million would receive average tax cuts of $125,000.

This is not a serious deficit reduction plan. It is a budget that accelerates the nation's redistribution of wealth and income, already at historic highs, to the haves by undermining the nation's social compact with its poor and working middle classes.

Walker taken to task at DC hearing

U.S. House Oversight and Government Reform Chairman Darrell Issa convened a hearing today on the "tough choices" facing state governments. But instead of focusing on real solutions to state budget crunches, Issa invited Wisconsin Governor Scott Walker to tell members of Congress that attacking teachers, nurses, and other middle class workers is a good thing.

The hearing was not the inside the beltway coming out party that Walker planned. Cleveland Ohio Congressman Dennis Kucinich and Milwaukee's Congresswoman Gwen Moore made sure of that by taking Walker to task for scapegoating Wisconsin's public employees and stripping them of their rights while cutting taxes for the rich and corporations while raising them on the working poor. 

100 Years After Triangle Fire, Clock Turning Back on Workers' Rights

100 years after the deadly Triangle Shirtwaist factory fire in New York City that killed 146 mainly young Jewish and Italian immigrant women workers, a garment factory fire in Bangladesh killed 26 young female workers and injured almost 100. In both cases the exit doors were locked and many of the young women jumped to their deaths to avoid being burned to death.

Just two years ago MATC hosted  a National Labor Committee tour where three young female workers from Bangladesh discussed their 9 cent an hour pay making clothing for WalMart with a standing room only audience of MATC students.

U.S. corporations have moved production abroad to countries like Bangladesh to escape unions and the labor and workplace regulations that brought democracy to the American workplace.

The corporate dominated global economy is taking us back to the 19th Century when workers had no rights and protections. The rights people like the Triangle workers died for in the U.S. are being destroyed by moving production to global sweatshops in developing nations

As we remember the Triangle fire victims on the 100th anniversary of that terrible and avoidable fire, we must never forget that the inhumane conditions that caused their deaths continue to exist in garment factories in the developing world.

The fight for workers' rights continues.

Take back Wisconsin - Vote on April 5th