The Young Invicibles held a media event on Capitol Hill last week during which the student advocacy group and four Democratic Senators called for stronger regulation of the for-profit sector. Dymond Blackmon, a former student, spoke at the event. He said he racked up more than $90,000 in debt while earning an associate degree from the International Academy of Design and Technology, which is owned by Career Education Corp., a for-profit chain.
Some readers questioned how Blackmon spent that much money on a two-year degree, particularly given that the academy's annual tuition and fees were $12,000 or less when he attended it. Blackmon, through a Young Invincibles spokesman, declined to sign a waiver for federal privacy requirements, which would have allowed Career Education to release more detail about his time at the academy. But the company was able to provide some additional information without violating privacy rules.
Blackmon first enrolled at an academy campus in Orlando in January of 2005. He attended that campus for two years before transferring to another academy location in Tampa Bay. He said he was forced to transfer because the Orlando campus did not offer courses he needed for his major. But it's impossible to verify that claim without more information. Blackmon attended the Tampa campus for another 2.5 years. After 4.5 years he earned an associate of science in digital photography. The total tuition and fees for that time period would be far less than the $90,000 in debt and additional loans Blackmon said his mother took out to pay for the degree, so it's likely he used a substantial portion of those loan amounts for living or other expenses.
Bridgepoint Education on Friday announced in a corporate filing that it would pay $7.25 million to Iowa's attorney general for consumer restitution and fees related to an investigation of Ashford University, which the for-profit chain owns. The office of the attorney general, Tom Miller, had been investigating whether Ashford had violated the state's consumer protection laws. The university did not admit any wrongdoing as part of the agreement.
ITT Educational Services has filed a court motion to dismiss a complaint the Consumer Financial Protection Bureau (CFPB) lodged against the for-profit chain in February. In its first enforcement action against the sector, the CFPB accused ITT of predatory lending and other abusive practices.
However, the lawsuit filed this week by ITT claims the bureau has overstepped its statutory authority. More broadly, the for-profit claimed the CFPB's enforcement approach lacks due process and is unconstitutional.
"Defendant ITT Educational Services does not provide consumer financial products," the filing said, "and its conduct as described in the Bureau’s complaint falls outside the Bureau’s jurisdiction."
U.S. Sen. Richard Durbin of Illinois sent high school principals in his state a letter Tuesday urging them to shield their students from the "often irresistible lure" of for-profit colleges -- drawing a pointed response from one of his constituents, DeVry Education Group.
Durbin, a leader among the Congressional Democrats who are deeply skeptical of the for-profit higher education sector, told the principals that he was continuing his work in Washington to "correct federal policies that enable this industry to take advantage of students." But he asked the principals to do their part to "ensure that your students are receiving honest and accurate information about their higher education options. "Students can hardly ride a CTA bus, watch their favorite prime-time sitcom, or surf the internet without being bombarded by attention-grabbing advertisements from for-profit colleges offering a hassle-free enrollment process, federal financial assistance, flexible schedules and a promised path to high-paying jobs and a better life," Durbin wrote. "But too often it doesn't work out that way."
His letter cites statistics about the completion rates and debt loads of the colleges' students and suggests that principals remind their students that community colleges offer similar programs "at a fraction of the cost."
In its response, DeVry, which is based near Durbin's Chicago home, noted that DeVry has educated tens of thousands of Illinoisans since 1931 and that the company teams with the Chicago Public Schools on an Advantage Academy that lets students earn associate degree credits while in high school. The program, it notes, was started in tandem with the then-head of the city's schools, Education Secretary Arne Duncan, a close ally of Durbin's.
"The facts, and our history, demonstrate our commitment to Illinois students and their success in higher education," wrote Sharon Thomas Parrott, DeVry's senior vice president for external relations and global responsibility. "We encourage the senator to visit our Chicago campus, and our Advantage Academy, so that he can learn firsthand how we serve our students."
The U.S. Department of Education used a misleading statistic in its rollout last month of proposed "gainful employment" regulations aimed at for-profit institutions, The Washington Postreported. Advocates for the sector had pushed back on the validity of the department's prominently featured assertion that graduates of 72 percent of programs at for-profits make less than high school dropouts. The Post looked into the argument on its "Fact Checker" blog, and sided with for-profits.
For starters, the baseline earnings calculation for high-school dropouts was not up to snuff, the newspaper found. The feds used a relatively high figure, relative to other data. And then the department, in both a White House briefing and in written material, used the figure in comparison to for-profit programs. That was an "apples to oranges" comparison, the Post said. One key reason is that the median salary for high-school dropouts did not include data for unemployed workers. It also factored in people who were many years into their careers, while using only recent graduates for the for-profit graduate figure.
The department defended the statistic, which the Post called "bogus." An official said the figure was merely a benchmark, and that problems with for-profits are serious. "However you cut it, one statement remains true: Graduates of a significant number of for-profit career college programs wind up getting jobs with very low earnings -- a fact that should cause concern for any consumer who’s considering those programs as a post-secondary option intended to prepare them for a job.”
Massachusetts sued Corinthian Colleges Thursday, charging that it engaged in illegally deceptive marketing, including the use of inflated job placement statistics and high pressure tactics on prospective students. The suit by the state attorney general charges that the for profit system's campuses in the state told prospective students that various programs had placement rates ranging from 70 to 99 percent, when the rates in these programs were actually between 20 and 30 percent.
Kent Jenkins, a Corinthian spokesman, told The Boston Globe that Corinthian has "a strong record of offering students a quality education and treating them honestly and fairly." Jenkins said that the attorney general didn't even one complaint from a student at a Massachusetts campus.
The announcement of the suit, however, does quote such a student. The student says that a Corinthian recruiter "called me every day at any time during the day or night to tell me that car[eer] will change my life. Guess what? It didn’t! I’m working at my city grocery store.”
Three Congressional lawmakers are pushing for a new federal committee that would coordinate the government’s oversight of for-profit colleges. Senators Dick Durbin of Illinois and Tom Harkin of Iowa, both Democrats, plan to introduce legislation Thursday that would create a committee comprising representatives from nine federal agencies that oversee for-profit colleges.
The committee would be tasked with improving the coordination among the various federal and state regulators that are investigating for-profit institutions. It would also publish an annual “warning list” of colleges that have been found guilty of illegal activity or institutions for which the committee otherwise has “sufficient evidence” of widespread abuses. Representative Elijah Cummings, a Maryland Democrat, plans to introduce an identical proposal in the House, but both bills are likely to face fierce opposition from Republicans, who have been critical of the Obama administration’s efforts to more tightly regulate the for-profit industry.
The U.S. Senate's Committee on Health, Education, Labor and Pensions (HELP) on Wednesday announced that it had approved Portia Wu as assistant secretary of labor for employment and training. Wu is a lawyer who previously worked for the committee. She replaces Jane Oates, who left the Labor Department last year and is now vice president for external affairs at the Apollo Education Group, which owns the University of Phoenix.