For-Profits Under Assault

[WilliamW]

"For-profit" education includes some of the top distance learning providers, such as Washington Post Co. (the parent of Kaplan), Corinthian Colleges, DeVry, Apollo Group (U of Phoenix) and American Public Education Inc (APUS/AMU).

Once again, it's the entrenched higher learning cartel working hand in glove with the government to restrict markets and limit access to online learning opportunities.

For-Profit Education Under Assault
Posted by Brian Darling (Profile)
Saturday, September 25th at 9:00AM EDT

For-profit education is under assault from elitists who hate the idea of free market educational institutions.  It is also under attack from bureaucrats at the U.S. Department of Education who are trying to make it hard for students to arm themselves with the education needed to find a job.  Elitism is alive and well at the Department of Education.

The Department of Education announced yesterday that they are “on schedule to implement new regulations of the for-profit education sector dealing with gainful employment and 13 other issues to protect students and taxpayers.”  The non-profit sector feels threatened; therefore allies in the Administration are trying to use the power of the federal government to provide non profit schools a competitive edge to slow the growth of for-profit institutions.  For-profit institutions are the trend and they are becoming more popular.

Senator Jim Risch (R-ID) has introduced legislation to prevent the Department of Education from denying federal financial aid to students attending for-profit colleges and vocational certificate programs.  Senator Risch said of his effort:

The ‘gainful employment’ rules could deny hundreds of thousands of students access to the training and skills development they need to secure a job in today’s troubled economy.  Highly-skilled workers are in high demand in certain sectors and propriety schools are uniquely qualified to meet that need.  It is simply irresponsible for the government to throw roadblocks in front of students and institutions at a time when job creation in America should be the administration’s number one priority.

Senator Risch’s legislation, S.3837, the Education for All Act, would forbid the Department of Education from singling out students from proprietary and vocational institutions and treat them differently than other students.  These institutions have proven to be uniquely qualified to help students find jobs in today’s complex economy.

Risch joins Senators Mike Enzi (R-WY) and Congressman Joe Sestak (D-PA) in writing letters expressing concern about this proposed rule.  Enzi wrote that the proposed rule “unfairly holds for-profit institutions to a higher standard for student debt and default than all other institutions of higher education.”  These elected federal officials are all concerned about the Department’s action on this issue is the number of members sending letters of interest to the Department of Education is up to 80 members of Congress according to the Coalition for Educational Success.

The Department of Education has proposed a rule to “require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program’s graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.”  Although this may sound reasonable, the next step is for the department to evaluate the eligibility of students in order to deny students access to student loans if they deem them unfit for the loan.  The proposed regulations provide a massive new regulatory structure over what High School diplomas qualify as satisfactory and provides new regulations defining “satisfactory academic progress.”  The bottom line is that these are complex new regulations intended to make it harder for the for-profit educational institutions to operate.

There are two troubling aspects to this rule.  First, these regulations are not a requirement of not for profit institutions.  If these types of regulations are not applied to for profit institutions, then it is not fair to treat the for-profit schools differently.  Furthermore, the fact that the Department is trying to do without legislation is troublesome.  This is an important enough decision to put Members of Congress on record.  If this is a good idea, then the Congress can have hearings and pass this dramatic change and burden with regard to for-profit institutions.  

The Department of Education had to publish the new “Gainful Employment” rule and allow for public comment as part of this rule making process.  The Chronicle of Higher Education reported that the Department received more than 85 thousand comments on it.  Under a provision of the Administrative Procedure Act (APA), the Department is supposed to review these comments, because they are supposed to read them and respond when necessary.  The Department states that a final decision on these regulations is on schedule, yet they modified the schedule to insure that they reviewed the commentary and did not violate the APA.

The Department of Education received more than 85,000 comments on the “Gainful Employment” rule, according to the Chronicle of Higher Education.  I have had experience in this process and sometimes the bureaucracy is not responsive to the comments.  In the bill creating the Transportation Security Administration was a provision allowing the arming of pilots in the wake of 9/11.  A public comment period was conducted in January of 2002 by the Federal Aviation Administration.  After overwhelming support for the idea of arming pilots against terrorism and setting up a program to train commercial pilots to protect the cockpit from hostile takeover, the FAA concluded that they were going to ignore the comments and not move forward with the program.

In May of 2002, Transportation Undersecretary John Magaw announced at a Senate Commerce Committee hearing that he would not approve of the program.  Congress ultimately stepped in and established the program that is still in effect today and is a success.  This armed pilots fact pattern may be repeated if the Department of Education also ignores the will of the American people and Congress.  It is possible that if the Department of Education moves forward, Congress will step in and overturn the decision through legislation.

A combination of threatened not for profits and their elitist alumni who look down their noses at a sector that traditionally serves the somewhat under served may be one reason for this effort.  Also, it’s probably accurate to say that there are plenty in the Obama orbit who simply think the words ‘for profit’ and ‘education’ don’t belong together under any circumstances. They want to snuff out the sector and they are continuing down the road to do so with this regulation.  Hopefully Senator Risch and other allies of students who desire to attend for-profit educational institutions win the war of ideas on this issue.

[ham]

The Department of Education has proposed a rule to “require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program’s graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.” Although this may sound reasonable, the next step is for the department to evaluate the eligibility of students in order to deny students access to student loans if they deem them unfit for the loan. The proposed regulations provide a massive new regulatory structure over what High School diplomas qualify as satisfactory and provides new regulations defining “satisfactory academic progress.” The bottom line is that these are complex new regulations intended to make it harder for the for-profit educational institutions to operate.

For once I agree with big brother.
Of course they are doing it for the wrong reasons, but I see it as follows...
Remember the University of Phoenix scandals detailing how boiler room cold callers would hard sell single mothers of color and other sensitive groups into getting in debt for life to get a degree, waving unrealistic rosy pictures of a possible fat income in the future?
Many for profits do NOT get their business from "the market" but from artificially pumped "special interest" groups awash in taxpayers' money: that is not my idea of free market, but the USSR would have appreciated it.

[Virtual Bison]

I am no fan of U of Phoenix. And what Ham says is correct. It is accredited but much of its practices are no better than a lot of these so-called "Diploma Mills," many of which are simply unacredited schools which do not conform to what others believe a University or College should be.

But I do see a trend here. You see, the elitists began with Schools which were unacredited, either by choice or being unable to get accreditation. They began with schools like Breyer State or LaSalle. When they could not put them out of business, they began punishing students and graduates. Now that they tasted blood they are extending their witch hunt to for profit colleges.

Anyone care to rember the words of Martin Niemoller? (google the name if you do not know what I am talking about)

[Don Dresden]

Anyone care to remember the words of Martin Niemoller?

From back in the days when describing someone as a "Lutheran pastor" didn't make people laugh.  Survived Dachau and lived to age 92 (did not roll his Mercedes).

[Virtual Bison]

Anyone care to remember the words of Martin Niemoller?

From back in the days when describing someone as a "Lutheran pastor" didn't make people laugh.  Survived Dachau and lived to age 92 (did not roll his Mercedes).

One of my heros.

His words were really quite prophetic.

I believe that if civilization is to survive than we need to heed the warnings of those who have gone before us.

And I saw, with my own eyes how a democratic society has marginalized those who pursue academic freedom.

Its very frightening to see how complacent society has become.

[Winston Smith]

Buried down in the story is the most interesting part:  Keiser U has filed suit against two Florida State College officials, alleging a smear campaign.

Florida attorney general investigating 5 for-profit universities

By Scott Travis, Sun Sentinel
4:36 p.m. EDT, October 21, 2010

Adding more scrutiny to an embattled industry, Florida Attorney General Bill McCollum has begun investigating allegations of deceptive practices at five for-profit higher education companies.

The civil investigation, which opened Monday, focuses on consumer complaints made against Kaplan Inc., the University of Phoenix, MedVance Institute, Argosy University and Everest University. They include allegations that the schools made misrepresentations regarding financial aid and engaged in unfair practices in recruiting, enrollment, accreditation, job placement and graduation rates.

The for-profits already are under heavy scrutiny from the federal government because of the large sums they get in financial aid. But few states are involved. Some attorneys general have investigated complaints against individual institutions, but several experts say this is the first they know of a state attorney general taking a more thorough look at the industry.

"It's about time," said John Andrews, a Tampa lawyer who represents some former students at for-profit schools. "The ripoffs have got to stop."

Most of the schools said they hadn't been contacted by McCollum but planned to cooperate with the investigation.

"We fully support efforts to root out fraud and deception across all of higher education," said Jacquelyn P. Muller, spokeswoman for Education Management Corp., which owns Argosy.

State officials wouldn't say what they might do if the allegations are found to have merit.

"The investigation is currently in its infancy and it would not be appropriate for us to speculate." said Ryan Wiggins, a spokeswoman for McCollum.

At least 10 complaints have come from students in Broward and Palm Beach counties who said they were stuck with thousands in debt, had received numerous calls from collection agencies and were not able to find a job.

Hearings from the Senate Health, Education, Labor and Pensions committee, as well as an investigation by the Government Accountability Office, found misleading and questionable practices at 15 schools during an undercover investigation. These include Kaplan College in Pembroke Pines, which has suspended enrollment of new students, and MedVance in Miami.

Federal officials found incidents at both schools where admissions officers told an undercover applicant not to worry about paying back student loans. A Kaplan College admissions officer also falsely told the applicant the school had the same accreditation as Harvard and the University of Florida.

Officials from MedVance, owned by Baltimore-based Education Affiliates, could not be reached, despite calls to its headquarters. Kaplan officials would only say they would cooperate with the investigation.

The for-profit industry has been concerned not only by the investigations, but also by proposed federal regulations that would strip them of much federal aid if their students don't find jobs after they graduate or are unable to repay their student loans.

Keiser University in Fort Lauderdale, which is not part of McCollum's investigation, has filed a lawsuit against two administrators at Florida State College in Jacksonville, alleging officials there led a smear campaign. For-profits see community colleges as their main competitors for students and federal dollars.

Enrollment in for-profit colleges has grown from about 365,000 to almost 1.8 million in the past few years, federal officials said. In 2009, students at for-profit colleges received more than $4 billion in Pell Grants and more than $20 billion in federal loans provided by the U.S. Department of Education.

But the negative publicity has resulted in enrollment declines this year and drops in share prices at some of the publicly traded companies.

Industry advocates say it's not fair to vilify an entire industry because of complaints about individual employees.

"The attorney general should not take allegations and assume there are facts; or anecdotes and assume they represent a pattern," said Lanny Davis, a lawyer for The Coalition for Education Success, made up of about 75 for-profit schools. "And several rotten apples do not constitute a barrel."

[ham]

At least 10 complaints have come from students in Broward and Palm Beach counties who said they were stuck with thousands in debt, had received numerous calls from collection agencies and were not able to find a job.

As I say, buyer beware.

A Kaplan College admissions officer also falsely told the applicant the school had the same accreditation as Harvard and the University of Florida.

Technically, I think it was so "recognized by an accreditor in turn recognized by CHEA" or something, but of course the student meant something else...

The for-profit industry has been concerned not only by the investigations, but also by proposed federal regulations that would strip them of much federal aid if their students don't find jobs after they graduate or are unable to repay their student loans.

I disagree with the "finding a job" item, but agree with more selective practices...enough with goading single Hispanic mothers of three on welfare into deeper debt.
Again, what stinks is that these for-profit heralds of the free market make much of their dime on...government welfare...and this using sleazy tactics.

[Armando Ramos]

Keiser University in Fort Lauderdale, which is not part of McCollum's investigation, has filed a lawsuit against two administrators at Florida State College in Jacksonville, alleging officials there led a smear campaign. For-profits see community colleges as their main competitors for students and federal dollars.

Link to Broward Country Clerk's case summary: http://www.browardclerk.org/clerkwebsite...CE10040249

If the motivation behind the attack on for-profits wasn't clear before, this case certainly should open some eyes.  It's all about driving competitors out of business.  

Keiser University sues FSCJ president
The lawsuit claims the negative publicity has hurt enrollment.

Posted: October 4, 2010 - 6:28pm
By Matt Coleman

Keiser University, a regional for-profit college, has filed suit against Florida State College at Jacksonville President Steven Wallace and one of his top administrators, saying they tried to sully the school’s image by colluding with detractors of for-profit colleges.

The crux of Keiser’s civil suit, filed Monday in Broward County, hinges on e-mails from Wallace and Susan Lehr, FSCJ’s vice president of government relations. The e-mail exchanges included representatives from The Institute for College Access and Success, a national group that has lobbied for tighter restrictions on for-profit schools.

The lawsuit claims the community college leaders tried to launch a clandestine smear campaign designed to build negative publicity for the proprietary college, which has one campus in Jacksonville.

An FSCJ spokesman said Wallace hadn’t received the lawsuit by Monday evening and declined to comment.

In the e-mails, an account linked to Wallace disparages the for-profit sector in a note to Gilchrist Berg, a prominent Wall Street short seller who founded a multibillion-dollar Jacksonville-based hedge-fund firm.

“All right, my friend. Here is a bunch of good stuff to get you started in your exploration of greed, corruption and predatory schemes among Florida’s proprietary and for-profit career 'colleges,'” the e-mail said. “The new technical college we will launch on 8/1/09 is designed, in part, to drive the sleazebags out of our region.”

The same e-mail identifies Lehr as the “designated antagonizer of the privates.”

Other e-mails include correspondence between Lehr and Steve Eisman, a hedge-fund manager who gave a vitriolic speech against for-profit education during a Senate hearing in May.

“I cannot thank you enough for speaking out on the for-profit higher ed industry,” the e-mail said. “I read your speech and could just leap with joy!”

The lawsuit alleges Lehr “tailored a Florida State College press release” to the speech’s message, which alluded to the “subpriming of students.” The release was distributed to multiple news outlets, according to the lawsuit.

Keiser officials said the negative publicity has hindered student enrollment and financially harmed the company. The suit seeks damages, but a total amount wasn’t listed.

James Waldman, Keiser’s general counsel, said this is the first lawsuit ever filed by Keiser.

It’s unclear if this is the first time a for-profit school has sued a state-funded institution.

“My hope is other proprietary schools take action if this is going on elsewhere,” Waldman said. “There is no place in this country for the government schools to operate in such a manner to harm private businesses.”

[Dickie Billericay]

“My hope is other proprietary schools take action if this is going on elsewhere,” Waldman said. “There is no place in this country for the government schools to operate in such a manner to harm private businesses.”

The higher ed cartel must be feeling pretty smug about having eradicated all the unaccredited religious and startup schools ("diploma mills"), and now are turning their attention to for-profits ("predatory sleazebags").  

Virtual Bison has it right; who are they coming for next, and who will be left to speak up?  

What happens when the government decides that the non-profits ("unfair, greedy, evil, selfish, cruel") don't really need all those billion dollar endowments quite as much as the government does?

[RespectableGent]

Don't these asswipes realize that non-profit schools also operate for a profit?

The only difference between a For-Profit and a Non-Profit is that in a For-Profit the majority of the profits can go to one person at the top of the chain, while at a Non-Profit the profits must be distributed evenly amongst shareholders. The operations of For-Profits and Non-Profits are otherwise identical.

Running a school for a profit is what Non-Profits already do. Princeton, the University of California, and the University of Illinois all operate in a drive to turn a profit.