For-profit colleges

Sweating Bullets at the GAO

The authors of the Government Accountability Office’s for-profit secret shopper investigation pulled off a statistically impressive feat in August. Let’s set aside for the moment that on Nov. 30, the government watchdog quietly revealed that its influential testimony on for-profit colleges was riddled with errors, with 16 of the 28 findings requiring revisions. More interesting is the fact that all 16 of the errors run in the same direction -- casting for-profits in the worst possible light. The odds of all 16 pointing in the same direction by chance? A cool 1 in 65,536.

Even the most fastidious make the occasional mistake. But the GAO, the $570 million-a- year organization responsible for ensuring that Congress gets clean audits, unbiased accounting, and avowedly objective policy analysis, is expected to adhere to a more scrupulous standard. This makes such a string of errors particularly disconcerting.

In fact, the GAO is constituted precisely to avoid such miscues. Its report-vetting process entails GAO employees who are not involved with the project conducting a sentence-by-sentence review of the draft report, checking the factual foundation for each claim against the appropriate primary source. While the research is compiled and proofed, legislators who requested the investigation may keep in routine contact with the GAO to stay apprised of the inquiry.

The GAO issues hundreds of reports a year, and by most accounts revisions of the kind released two weeks ago are almost unheard of. As a former GAO assistant director who worked at GAO for a decade on issues including higher education explained to us Wednesday, the organization’s rigorous review process leaves little or no room for error.

He said, “[It is] extremely rare for the GAO to issue corrected testimony or reports. In fact, in my 10 years that I was there, I never once saw that happen.” He went on to say, “It is stunning to me, given [the GAO] process, how this many errors could have happened. It raises a lot of questions as to the pressure the GAO was under. . . . They must be sweating bullets over at GAO.”

What kinds of mistakes are we talking about here? The corrections were generally changes in emphasis or wording that altered the complexion of the finding. For instance, the original report claimed that a financial aid officer purposely ignored an undercover applicant’s supposed $250,000 in savings when calculating eligibility for financial aid. What the report neglected to reveal was that the financial aid representative did so “upon request by applicant.” This does not necessarily exonerate the financial aid officer, but it does raise questions about the impetus for the inappropriate behavior.

In another instance, an applicant went from being informed that he or she “could take out the maximum in student loans” despite not actually needing that much (revised) to being told that he or she “should” (original) do so. And in a different scenario, a for-profit official supposedly told an applicant that massage therapists could earn up to $100 an hour -- when the review showed that the official actually said that the applicant could expect to earn up to $30 an hour, a figure that is below the Bureau of Labor Statistics’ estimate of $34 for therapists in California.

The list goes on and on. Each of the GAO’s 16 corrections indicates that the recorded evidence was presented in an inaccurate or incomplete fashion, in every case portraying for-profits in a negative light.

What happened? Our source speculated that the pressure of issuing the report in time for Sen. Tom Harkin’s Aug. 4 committee hearing and in time to support the issuance of the Department of Education “gainful employment” regulations led GAO investigators to be less careful than normal.

The problem is that the “we were in a hurry” defense doesn’t explain why the errors all point in the same direction — one that happens to reflect the policy preferences of the chairman of the Senate HELP committee and of administration appointees at the Department of Education. Lanny Davis, the veteran Clinton hand who has now taken to the barricades for the for-profit providers, told us Wednesday that he thinks there is an obvious distinction between “gross incompetence” and “setting out to deceive” — and that the original GAO report crosses the line. “Given that all 16 of the so-called mistakes portrayed career colleges in a negative light, I believe there is no sliver of possibility that this was not an intentional distortion of the truth by somebody with an agenda or somebody who was pushed into doing it,” Davis argued.

The issue goes beyond incompetence or politically motivated misinformation in a government report; the message of the GAO’s initial publication has been “baked in” to the Harkin hearings and the Department of Education’s rulemaking on gainful employment.

Our GAO source observed that the original report’s finding that all of the investigated providers were up to no good was “woven into the overarching narrative that there are a lot of bad actors out there that have to be dealt with.” Even though the GAO’s revisions were substantial enough to merit a public correction, the narrative has crystallized and been wielded by Harkin and Department officials to press the case for their agendas as recently as this week (see Harkin’s December 14 speech on the Senate floor). Even more troubling, despite finally acknowledging the litany of errors that permeate the report, GAO spokespeople have asserted that “nothing changed with the overall message of the report, and nothing changed with any of our findings."

The bigger question is whether we can be confident that the GAO has caught all of the errors or is being honest with the report’s critics. The former GAO official speculated that the recent corrections could be just the "tip of the iceberg in terms of the mistakes made in the report. It calls into question the entire report because it shows that there were not sufficient quality controls in place for whatever reason.” Complicating things is that the GAO is not subject to Freedom of Information Act Requests, which makes getting to the bottom of things just a bit difficult. (Of course, the Department of Education is subject to FOIA requests, and the advocates for the career college sector have filed suit to obtain the primary source materials.)

Regardless of how this gets sorted out, this affair has crippled efforts to talk honestly about problems that need to be addressed. It is hardly shocking that there are unscrupulous for-profit providers trafficking in misinformation and misusing federal student aid dollars. Every sector, public and private, faces such problems. And the practices of all providers that collect public funds deserve to be scrutinized and monitored. The government has every right to police how its student aid dollars are being spent.

But trampling public confidence in an esteemed federal watchdog helps no one — not the individual students that are being taken advantage of by fly-by-night providers, not the colleges that are acting in good faith, not the bureaucrats charged with regulating the sector, and not the taxpayers who wish to root out corruption in student lending.

Author/s: 
Frederick M. Hess and Andrew P. Kelly
Author's email: 
info@insidehighered.com

Frederick M. Hess and Andrew P. Kelly are director of education policy studies and a research fellow in education policy studies, respectively, at the American Enterprise Institute.

Misrepresenting the GAO

Friday's op-ed in these pages, “Sweating Bullets at the GAO,” by representatives of the American Enterprise Institute, offers a lopsided, inaccurate depiction of the Government Accountability Office's recent update to its Aug. 4 report on the recruiting practices at for-profit colleges.

First and foremost, the authors ignore the fact that these updates did not alter the very troubling findings or conclusion of the report. While the GAO made some revisions and clarifications of the long list of misleading practices it documented, the finding stands -- every single school its investigators visited engaged in misrepresentation, deception or outright fraud.

In an attempt to paint the GAO’s update as a dramatic development, the authors cite an anonymous source who claims that the GAO rarely issues this sort of revision.

That’s just not true. According to the GAO’s spokesman, GAO has issued 12 such revisions in the last year alone, including a similar one in September. Additionally, their assertion that all of the edits were made to correct “errors” that cast “for-profits in the worst possible light” is misinformed. Many are simple clarifications, and some bolster the GAO’s findings.

And let’s not forget -- the GAO’s discovery of fraudulent or deceptive recruiting tactics was just the tip of the iceberg. My Committee has issued three reports based on data we collected from 30 for-profit education companies that raise several more serious concerns about whether many for-profit colleges have the best interests of their students at heart.

We’ve found that 95 percent of for-profit students end up saddled with debt (as compared with 16 percent of community college students), and that 57 percent of students at 16 for-profit schools withdrew without a diploma in a single year. Most recently, we documented a startling increase in the amount of military education benefits flowing into this sector in the last year.

Given the findings of this investigation, it’s no surprise that the for-profit education industry has turned the full force of its multimillion dollar lobbying operation on the GAO in an attempt to muddy the waters and distract from the growing consensus that their industry needs greater regulatory oversight.

Far from “sweating bullets,” the GAO is helping to illuminate a growing problem.

Author/s: 
Tom Harkin
Author's email: 
newsroom@insidehighered.com

Senator Tom Harkin, a Democrat from Iowa, is chairman of the Senate Committee on Health, Education, Labor and Pensions.

The Telemarketing of Higher Ed

There is a fierce battle for students being waged among for-profit colleges. To experience the frenzy of for-profit recruiting firsthand is enlightening and a little horrifying. I have occasionally provided my contact information to marketing agencies online to solicit professional services, which generated a reasonable amount of follow-up calls. But I have never been inundated by calls at the pace and level of intensity that I received one recent morning from for-profit college admissions officers.

During an especially productive work session, I received a call on my work-issued cell phone at 9:12 from a young man asking to speak with Tiffany. I politely informed the caller that there was no one by that name in my office. I received another call for Tiffany at 9:14. I assumed the caller was an associate of the previous caller and chalked it up to persistence. At 9:15 when I received yet another call for Tiffany, my graduate education kicked in and I began to recognize a pattern. I politely explained that Tiffany was unavailable and asked the caller to explain the purpose of the call. The caller informed me that he was an admissions officer attempting to contact Tiffany on behalf of a well-known for-profit college; he was trying to reach her to follow up on a request for information on undergraduate degree programs, he was sorry to inconvenience me, and he would remove me from the college’s call list.

I had similar conversations with the subsequent 19 admissions officers at 9:19, 9:22, 9:33, 9:41, 9:54, 9:58 ... 12:27, at an average of seven calls per hour. I received a "courtesy call" from a notorious for-profit institution to which I replied, "Oh I know who you are, I heard about you on a documentary about for-profit colleges," to which the caller sheepishly replied "yes."

During the next call, I insisted on speaking with an admissions office supervisor (this call was from a reputable for-profit college) who was able to tell me how her institution had obtained my phone number. My number appeared in an online database that services for-profit colleges by linking prospective students seeking information about educational opportunities to admissions offices. The company that manages the database collects fees on a cost-per-lead basis. Tiffany must have mistakenly entered my phone number into this database. Between the two of us we generated 23 individual invoices in a little over three hours.

It was an interesting experience to be personally hounded by for-profit college admissions officers for the better part of a morning. I didn't ask each caller to identify his or her affiliation, but all of those whom I did query represented for-profit institutions. I received bundles of glossy advertising materials from colleges and universities as a senior in high school, but that experience never felt as aggressive, calculated, and impersonal as the phone calls I received throughout the morning.

As a student of higher education administration I was forced to reconsider my conception of the contemporary model of higher education. I have long argued that innovative business practices are essential to higher education’s survival, necessitated by increasing demand and market differentiation; however, the motives and strategies of some for-profit colleges and universities feel the same as those of our least favorite businesses ... only a lot worse.

Sorry, will you please excuse me? I have to take a call.... "Hello, this is Tiffany."

Author/s: 
David Farris
Author's email: 
info@insidehighered.com

David Farris is a Ph.D. candidate in the higher education program at George Mason University.

Gainful Employment: A Privacy Black Hole?

In an interconnected world, where data collected for one purpose can be easily transferred and used for new, unforeseen purposes, we must be vigilant to protect consumers from uses of their data that do not match their expectations.

Transparency is the cornerstone of the modern privacy regime. An individual has the right to understand what data is being collected about him and to make informed choices about how that data is going to be used.

Last July, the U.S. Department of Education (ED) proposed its “Gainful Employment Rule,” which seeks to establish complex measures for determining whether education programs at proprietary postsecondary education institutions (and vocational programs at nonprofit colleges) lead to gainful employment in a recognized occupation. Under the proposed rule, a program’s eligibility for federal student financial aid under Title IV of the Higher Education Act would be based on meeting certain metrics related to student loan debt. ED recently sent a revised version of this regulation to the Office of Management and Budget, the agency in charge of reviewing regulations before they are made final. The revised rule could be out any day.

One measure that the Education Department proposes to use assesses whether a program’s annual loan payment is either 8 percent or less of the average annual earnings of program completers or 20 percent or less of discretionary income of program completers. These ratios might change in the final rule. In order to calculate average annual earnings and discretionary income, ED proposes that the Social Security Administration (SSA) would take the actual incomes of all students who completed a program and aggregate the students’ incomes into a number that ED would use to make the gainful-employment calculation.

Unfortunately, the proposed Gainful Employment Rule suffers from a fatal privacy flaw: it fails to provide transparency into how the federal government will collect and treat student data required to implement the rule. There is much to be applauded in the department’s effort to address loan debt and employment; the problem is not in these goals but in the methods the ED is planning to use to achieve them.

The first problem with the proposed regulation is that the details of how ED will receive student income data and how this data will be treated have not been resolved. Based on a preliminary agreement between ED and SSA, released by Social Security Commissioner Michael Astrue in response to an inquiry by Senator Orrin Hatch, it appears that the Education Department is planning for SSA to provide student income data to ED. However, there are no details as to exactly what additional data SSA will be collecting about students and what technical and administrative safeguards the agency will have in place to protect the increased data collection. ED and SSA must provide transparency into this process. Students and institutions need to know how SSA will handle their data.

Further, in his letter to Senator Hatch, Commissioner Astrue seeks to ease the Senator’s privacy concerns by stating that the data provided by SSA to ED will be “strictly statistical.” However, this raises additional transparency problems as both students and institutions will not have the ability to see how data about them is being used to make decisions that may be detrimental to their interests.

Without understanding what data went into the Education Department’s calculation, institutions and students will simply be informed of ED’s conclusion that they failed to meet a certain threshold and that they will no longer be eligible for federal financial aid. This black box calculation flies in the face of the uniformly accepted privacy principle of transparency.

This lack of transparency would also lead to further data collection by the institutions. As institutions would be unable to obtain the same data that the SSA used to make a calculation, in order to contest an adverse ED decision, an institution would have to provide income data that it has collected about its former students and potentially collect even more information than it had previously collected in order to perform its own income calculations.

In addition to the lack of transparency, the additional data that would be collected and maintained about students raises further privacy and security concerns. By collecting and linking more information about a student, the information the government already holds about a student will become more available should an errant government employee desire to misuse this information or should an unauthorized individual gain access to the data as a result of a data breach.

The consequences of a data breach can be profound – just ask Sony or Epsilon. And the government is not immune to these risks. In 2010, there were 104 reported government/military data breaches according to the Identity Theft Resources Center. Nineteen of these breaches were at federal agencies or military organizations, including the General Services Administration, the Department of the Interior, the Veterans Affairs Department, the State Department, and the IRS.

In short, any Education Department regulation that seeks to collect and use data about students must be fully transparent. Students and institutions must know what additional information is being collected, who is collecting this data, and exactly how the data is being used. This process cannot result in a privacy black hole. Any calculations that impact students and institutions must be done in a way that both protects student privacy while also giving the students and the institutions the ability to review and challenge unjust results.

Author/s: 
Daniel J. Solove
Author's email: 
newsroom@insidehighered.com

Daniel J. Solove is a professor of law at the George Washington University Law School and the founder of TeachPrivacy, a company that helps schools develop a comprehensive privacy program.

Changeover for Career College Group

Smart Title: 
Harris Miller resigns abruptly as chief executive of association of for-profit colleges, citing exhaustion. Board said to be tired of him, too.

'Lessons From the Edge'

Smart Title: 

Much of traditional academe doesn't know what to make of for-profit higher education. Is it to be emulated or feared? Gary A. Berg, dean of extended education at California State University Channel Islands, studied the sector -- and received extensive access to University of Phoenix administrators and faculty members. The result is Lessons From the Edge: For-Profit and Nontraditional Higher Education in America, recently published as part of the American Council on Education/Praeger Series on Higher Education.

A For-Profit Buys a Catholic College

Smart Title: 
A for-profit college based in California has purchased a Catholic liberal arts college in Iowa.

Credit Check

Smart Title: 

Rep. John Boehner told a group of college presidents Tuesday that members of Congress are tired of hearing from constituents who can't figure out why their children can't transfer credit from one institution to another.

"We hear about it nonstop," Boehner (R-Ohio) said. He said that both of his daughters were "caught up" in the issue, thinking that they were taking courses that would transfer -- only to find out that wasn't the case.

Congress to Colleges: Bush Budget is DOA

Smart Title: 

Put a bunch of college officials in a room the week after the release of the federal budget proposal, and it's not hard to tell what it contained. Lots of money, lots of smiles (O.K., that doesn't happen a lot).

With a budget like last week's -- full of hundreds of millions of dollars in proposed cuts to programs that colleges hold dear -- the mood is one of uncertainty and frustration. And that was evident Monday at the National Legislative Summit put on annually by the Association of Community College Trustees and American Association of Community Colleges.

Trade School Chain Shuts Down

Smart Title: 
A for-profit group in Oregon and Washington State -- facing several investigations -- shut  down suddenly at the end of last week.

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