U.S. Department of Education officials have determined that a slew of additional campuses owned by Corinthian Colleges misrepresented job placement rates, a finding that could help some 85,000 former students have their federal loans canceled.
The department announced Tuesday that hundreds of programs at the now-defunct for-profit chain's Everest and Wyotech campuses in California misled students about their job prospects after graduation. Officials also said they found misrepresentation at Everest University online programs based in Florida.
The announcement is essentially an expansion of the scope of the department's April findings against Corinthian-owned Heald College. At that time, the department slapped Heald with a $30 million fine, which sunk Corinthian's efforts to sell off those campuses and helped push the struggling company into bankruptcy several weeks later.
The department earlier this year said it would "expedite" the debt relief applications for about 40,000 former Heald College students because officials already had enough evidence to process their claims. (As of August, though, only 1,500 of those former students had actually filed claims).
With Tuesday's findings, the department said an additional 85,000 students at the affected WyoTech and Everest campuses will be eligible to have their loans canceled.
The department described its findings as the product of a joint investigation with California Attorney General Kamala Harris, whose office sued Corinthian more than two years ago, alleging misrepresentation of job-placement rates among other wrongdoing.
Harris said in a statement that the "findings will expand the pool of Corinthian students eligible for streamlined student loan relief options." She thanked the department for "joining" her office "to keep Corinthian accountable for their actions and providing debt relief to students who were misled."
Education Secretary Arne Duncan said the "results of our joint investigation will allow us to get relief to more students, more efficiently."
The U.S. Department of Justice on Monday announced a $95.5 million settlement with the Education Management Corporation to resolve allegations that it defrauded the government. The Huffington Postreported on the settlement over the weekend.
The agreement ends a long-running lawsuit that accused the for-profit college chain of illegally paying bonuses to admissions recruiters based on the number of students they enrolled.
Those allegations were brought to light in a whistle-blower lawsuit by a former employee in 2007. The Justice Department, as well as another former employee, joined the suit in 2011.
The Education Management Corporation owns the Art Institutes, Argosy University, Brown Mackie Colleges and South University chains. The company was taken private last month amid falling enrollments and revenue.
Loretta Lynch, the U.S. Attorney General, called the settlement "historic," noting that the payment would be the largest false-claims payment by a for-profit institution in history. EDMC's actions were "were not just a betrayal of students' trust," Lynch said, "they were a violation of federal law."
For-profit, Colorado-based Westwood College has reached a $15 million agreement with the Illinois attorney general, according to a report from a Chicago ABC News affiliate.
The college voluntarily agreed to pay $15 million to wipe out loans criminal justice students have obtained through Westwood since 2004. However, the credit does not cover the students' federal loans.
Illinois Attorney General Lisa Madigan launched the lawsuit almost four years ago after receiving complaints from students and former students about the "exorbitant costs, poorly accredited programs and failure to get a job in the field their degree was in."
A for-profit college owner hired a private investigator to follow a Miami Herald reporter who has written critical articles about the sector, according to court documents given to the South Florida newspaper.
The paper learned last week that reporter Michael Vasquez had been followed by a private investigator hired by Ernesto Perez -- the founder and majority owner of Dade Medical College. The situation was brought to light following a lawsuit by the private investigator against Perez for allegedly failing to pay the $4,971.87 contract.
Submitted by Paul Fain on October 29, 2015 - 3:00am
Stratford University, a for-profit institution based in Virginia, this week announced that it has become a public benefit corporation. That move, which a handful of other for-profits have made recently, is a legal change to a company's charter, which allows it to focus more on activities that do not generate a profit -- including actions that are aimed at benefiting the public.
"Stratford has a student-first mentality, and as a benefit corporation we have the liberty to make sure we are providing students with the best education in the best environment,” Richard Shurtz, the university's president, said in a written statement.
The university holds national accreditation. It offers credentials in information technology, hospitality, culinary arts, business administration and health care.
A group of Democrats in the U.S. Senate sent a letter Friday to Education Secretary Arne Duncan and Internal Revenue Service Commissioner John Koskinen urging them to stop for-profit colleges from converting to nonprofit status.
Those colleges, they argue, are looking to evade federal income taxes, gainful employment regulations and the so-called 90/10 rule, which restricts for-profits from receiving more than 90 percent of their operating revenue from federal student loans and grants.
"These sham nonprofits make a mockery of traditional nonprofit governing and accountability structures with incestuous leadership arrangements, troubling debt structures, while continuing to make hefty profits for those in charge with questionable results for students," the senators wrote in a news release. "As the agencies responsible for granting nonprofit, tax exempt status and protecting students, the [IRS] and [Education Department] must work together to better assess these conversions based on the priorities and authority of both agencies."
The senators were spurred to action following a recent report from the Century Foundation's Robert Shireman, a former Education Department official who joined the foundation as a senior fellow. Shireman described how several for-profits became nonprofits, arguing that they did so to avoid federal regulations. He also wrote that the IRS and the Education Department haven't cracked down on these entities because of a "regulatory blind spot," so each agency assumes the other is doing the monitoring.
Delaware Senator Tom Carper, Ohio Senator Sherrod Brown, Illinois Senator Dick Durbin, Massachusetts Senator Elizabeth Warren, Rhode Island Senator Jack Reed and Connecticut Senators Chris Murphy and Richard Blumenthal signed the letter.
Submitted by Paul Fain on October 23, 2015 - 3:00am
Three Senate Republicans on Thursday wrote to the U.S. Department of Defense to question its recent decision to temporarily suspend the University of Phoenix's eligibility for military tuition benefits.
The Pentagon's sanction of the for-profit chain was due to allegations about Phoenix improperly sponsoring recruiting events and using the Defense Department's seal on commemorative coins. Newly enrolling students may not use military tuition assistance at the university. Roughly 4,000 Phoenix students currently receive the benefit, which active-duty members of the military are eligible to receive.
Senators John McCain, Lamar Alexander and Jeff Flake, all Republicans, wrote to Defense Secretary Ashton Carter, asking him to "examine and reconsider" the decision. They said the move was unfair and based on vague, technical violations the university has worked to fix. The senators also wrote that the Pentagon's sanction was motivated by partisan congressional critics of for-profits, and criticized that the Defense Department cited ongoing investigations of Phoenix by the U.S. Federal Trade Commission and California's attorney general as part of the justification for the decision.
"We strongly believe that these earned benefits and educational opportunities for our service members should not be jeopardized because of political or ideological opinions of some members of Congress regarding the types of institutions that provide postsecondary education to our troops," they wrote.