COMMUNITY COLLEGE or "FOR-PROFIT" COLLEGE?

by Willette Coleman

They’re everywhere - TV, radio, online, billboards, magazines, newspapers, social media, even in your mailbox.  Their representatives have bombarded people with phone calls, driven by their homes, even recruited veterans in hospitals and wounded warriors’ centers.  They promise: “We’ll give you the best education.”  “We’ll put you on the right career path.”  Who are “they”?  Or, should I say, what are they?  “They” are for-profit colleges and universities – ITT Tech, Strayer, Everest, Kaplan, DeVry, the Art Institute, etc.

Their ads suggest that it’s better to attend a for-profit college/university than a community college.  (A little over a year ago, one ad stated this outright, but has since been pulled from the airwaves.)  So, I asked:  Are for-profits superior to community colleges?  Will they deliver on their advertised promises?  Will you get that much needed bang for your buck?  If you’re unsure whether to attend a community college or a for-profit, may I suggest you do as I did and take a closer look? 

A closer look reveals a huge education scandal wherein state and federal lawmakers are suing for-profit companies for “overly aggressive marketing practices and financial aid fraud” and high tuition.  After investigating nearly 30 for-profits, Sen. Tom Harkin’s (D-Iowa) found that “most charge significantly more than similar programs at community colleges….”  Everest’s tuition, for example, “…is nearly $60,000 compared to less than $4,000 at some area community colleges” and its “...degrees appear to be less valuable on the [job] career marketplace, “ reported the Huffington Post.  Sen. Dick Durbin (D-Ill.) expressed outrage that Corinthian, ITT Tech, Kaplan and DeVry Universities were among the schools under government investigation that also revealed that, in many cases, the credits students earned at for-profits were not transferable to community or 4-year colleges.

Look further and you’ll find that the Department of Education data concluded that “The situation for students at for-profit institutions is particularly troubling,” after its investigation showed that:

• Students who attend a two-year for-profit institution cost a student four times as much as attending a community college.    
• Eighty-eight percent of associate degree graduates from for-profit institutions had student debt, while only 40 percent of associate degree recipients from community colleges had any student debt.
• Students at for-profit institutions represent only about 11 percent of the total higher education population but receive 19 percent of all federal loans and make up 44 percent of all loan defaulters.

Then there’s the fake university that’s made media headlines.  In 2013, New York’s Attorney General, Eric Schneiderman, filed a $40 million suit against Trump University (yes, that Trump) for “operating a phony university.”  (See: NewYork Attorney General’s Suit Against Trump University May Proceed, Court Rules and Donald Trump University Lawsuit Is Lesson For All For-Profit Colleges.)  The paper billionaire engaged in “deceptive recruiting tactics into expensive programs that offer certificates or degrees with little value and poor job prospects,” Schneiderman said on Good Day New York.   

Promises

“Thanks to Everest, I did it,” declared the young optimist to TV audiences.  Another “student” said “Everest for life.”  Well, ask the nursing students where more than 90 percent attending nearby community colleges last year passed California’s required state licensing exams, while “Fewer than 70 percent of Everest students passed the exams, registering the lowest success rate of all nursing programs in the state.”  

While some for-profit advertise:  “You’re set up for success,” one student, in Adam Rust's report, said he felt like he was “…set up to fail” by the for-profit.   Jaqueta Cherry, who has incurred massive debt, is featured prominently in the report, and is among thousands of students with for-profit cautionary tales.  “Too often [for-profits] leave students with high debt or either no degrees or worthless degrees,” Undersecretary of Education Ted Mitchell said.  (See also: For-Profit Colleges Draw Minorities, Stir Murky Debate On Student Success)  Until recently, there has been no accountability for for-profits’ promises. 

(See:  6 Things to do to Keep from Becoming a "For-Profit" Cautionary Tale Yourself at the end of this post.)

Student Loans Debt

Data shows high rates of for-profit student loans default.  Collectively, students have been burdened with nearly $100 million debt from For-Profits such as Corinthian, which operated Everest.  (See: Student debt amnesty: Victims of for-profit college fraud to get relief)  Before filing for bankruptcy in 2015 after a federal investigation, Corinthian colleges’ “…revenue doubled to $1.75 billion…from 2007 to 2011, and generated $1.2 billion in government loans in its last year,” proving that For-Profits make BILLIONS from loans they know students can’t pay, especially since investigations show that the chances are slim to none that the graduate will get a good paying job or have a successful career.  Where “only about one in five students at community colleges takes out loans” wrote Chris Kirkhamin “four of 5 students at for-profit two- and four-year schools sign off on loans.”    

For profits also block students of their right to pursue legal action and force them into arbitration.  (See: Senators: No More Federal Funding To For-­Profit Colleges That Strip Students Of Legal Rights.)

For-profits’ unscrupulous tactics were also dramatized on the national TV show, The Good Wife, that emphasized student loans debt.  (See 'The Good Wife' tackles for-profit colleges and student debt.  The episode, Payback, is at the CBS website.) 

In my experience coaching young adults, one applicant told me that a for-profit proceeded to coerce her into getting a loan, after falsely telling her she “didn’t qualify for FAFSA.”  And, speaking of lies, investigators learned that recruiters have misled or lied to service members and veterans about their military benefits covering the full cost of tuition.  The more unscrupulous, among these “predatory cash cows’,” have been busted, on video, telling students to lie on the FAFSA application.  (See: For-Profit Colleges Caught on Video Encouraging financial Aid Fraud.)
 

Targeted Population/Recruitment

“Civil rights advocate Wade Henderson criticized what he called the ‘cruel,’ ‘unjust’ and ‘immoral’ attempts by some for-profit colleges to actively recruit low-income minority students…,” particularly single parent households with annual incomes below or near the Federal poverty level of $19,530 for a family of three; persons of color and are the “first generation” in their families to attend a post-secondary education institution.  For-profits declare that “…its schools welcome the least advantaged, hardest-to-educate students….”   “Hardest to educate?!!!”  Sounds insulting.   

In 2011, “US Department of Justice filed a massive lawsuit against the company behind the schools [that included The Art Institutes], Education Management Corporation, accusing it of fraudulently collecting $11 billion in government aid by recruiting low-income students for the purpose of collecting student aid money. Whistleblowers claim that student’s graduate loaded with debt and without the means to pay off the loans, which are then paid for with taxpayer dollars.”  According to GenerationProgress.org, The Art Institutes Use Predatory Admissions Tactics To Trap Students.

Veterans are another group that has become “a stable source of revenue for many of the schools” stated former Education Secretary, Arne Duncan.  He explained that for-profits, (such as ecpi university), which filed a suit against Florida for not allowing the school to use veterans’ education benefits) carved out their own GI Bill, meaning “they didn’t count federal student aid toward the 90 percent ceiling if it went to combat veterans of the U.S. armed forces.”  These under-reported tax dollars are administered by the U.S. Departmentof Defense, instead of through the Department of Education. 

In the past five years, for-profits have taken about 40 percent of G.I. Bill tuition benefits.  “Corinthian Colleges… received $186 million in military tuition funding.”  Tom Caper (D-Del.) said, “We need to use common sense here.  It doesn’t make sense for taxpayers to send veterans to for-profit schools that can be 100 percent subsidized using taxpayers’ dollars.” (See: For-profit colleges aggressively target veterans for enrollment. These Democrats want it to stop and The Wall Street Journal Praises For-Profit Colleges That Prey On Veterans.)

In addition to marketing, for-profits recruit students though an intriguing “lead generation” system.  Bet you never heard of this undercover activity.  Neither had I until I read  Rust’s post that explains the process, which includes accessing and tracking your digital footprint, including your activity on your smartphone, etc.

90% of Student Aid Money

Student aid money is our tax money, but for profits can take 90 percent of it.  90%?!  How did policy makers consent to these companies getting 1 percent, much less 90?  It’s call the federal “90/10” rule which allows for-profits to receive up to 90 percent funding from student aid programs including Pell Grants, prompting critics to label these companies “welfare queens.”  (See: Why for-profit colleges are the real welfare queens.)  President Obama’s administration significantly increased funding for Pell Grants available to low-income students.  “For-profit colleges have captured approximately 25 percent of Pell grants,” despite educating only 12 percent of college students nationwide, Henderson said.  Sens. Dick Durbin (D-Ill.), Tom Caper (D-Del.) and Richard Blumenthal (D-Conn.) introduced legislation in 2015 to close the 90/10 loophole.  The companies have scammed “the 90/10 rule in ways that are particularly ‘unconscionable’,” said Duncan. 

Greedy corporate bosses, however, think 90 percent isn’t enough.  They use loopholes in the 90/10 rule to take MORE.  These “Wall Street darlings,” as critics call them, “…lobby aggressively on ‘both sides of the aisle’ [and] have enough friends in Washington that a majority of the House of [Republican] Representatives voted to block regulations that President Obama attempted to instate in 2009,” that were finally enacted in 2015.  

Who pays for those incessant ads?

You… and I.  Tax payers.  Students hooked into taking out a loan are the same students that pay for for-profits’ advertisements that targeted and hooked them initially.  “To be very clear,” said Duncan, “this is your money.” 

Despite opposition from advertising companies and the Association of National Advertisers, Sherrod Brown (D-Ohio) “introduced legislation to ban colleges [for-profits and nonprofits] from using federal student grants and loans for advertising, marketing or recruitment,” in 2015.  In the meantime, after being sued for fraud by the Securities and Exchange Commission (SEC) last year, ITT Tech Education Services recruiting ads continue to run on our tax dollars.

A Brief BackStory

Once upon a time vocational/career-oriented studies (art, fashion, culinary, machine shop, auto mechanics, electrical and plumbing, construction, etc.) were taught in high schools (I got a certificate in shorthand and typing, along with my diploma).  Then, during the 1960s, state and federal governments began cutting high schools’ and community colleges’ vocational classes budgets.  Star Trek’s Mr. Spock might agree…this action defies logic.  Why would government policy makers take our tax dollars away from high school and community college budgets then give that money to for-profits?  Now, government personnel spend more time, money and energy investigating and charging them with fraud.  Really??!!!  Those tax dollars should return to high schools and community colleges.  It would further decrease the national 1.2 million drop out rate among high schoolers.  (See:  Drop Out Nation.  Time Magazine)


One other reason our tax dollars should be returned to community colleges is, in many cases, the dismaying issue of location, location, location.  Nationally, most community colleges are difficult for students, without reliable transportation, to get to.  And, even with online classes, most students situated in the targeted demographic can’t afford a computer and home Internet service (the Census Bureau reported in 2013 that 17 percent of households didn’t have a computer and 48 percent of citizens earning under $25,000 don’t have access to broadband at home according to the Federal Communications commission/FCC) .  So, as Rust described, for-profits’ structural aesthetics and state-of-the-art equipment are more appealing (with our tax dollars) than at most community colleges.

Another Cautionary Tale

Another student, we’ll call her Lydia, was attending Bartending School of America.  She’d planned to keep her day job as a teacher and work weekends to earn extra income.  Lydia attended classes for one week.  The following week, she knocked on locked doors.  Giving no prior notice, the for- profit had closed.  You can imagine how she feels.  Now she’s going through the trouble and anxiety of trying to get part, if not all, of her money returned.  Had Lydia looked closely beforehand, she would have learned that a certificate from a bartending program as a prerequisite for employment varies from state to state.  Lydia might not have even needed to get a certificate, since “Some bars simply rely on good old-fashioned experience when making a new hire,” stated bar/lounge owners and managers in The Truth about Bartending School.

Some bar owners/managers might even train an individual who demonstrates outstanding customer service skills.  If  Lydia doesn’t get back her money, she’ll need to file a complaint with the U.S. Department of Education, now headed by John King (acting Secretary of Education), who announced in February 2016 that the Department “…is creating a Student Aid Enforcement Unit to respond more quickly to allegations of illegal actions by higher education institutions.”

Despite poor reputations and lawsuits, for-profits’ keep-on-a-coming.  They've opened medial schools; yes, medical schools.  In the past, for-profits like DeVry, which is being sued by the Federal Trade Commission (FTC), erected medical schools off shore, like in the Caribbean.  Now, for-profit medical schools have sprung up in California, Idaho, New Mexico and Utah, regardless of concerns whether they can properly train individuals to be doctors.   

"A school's mission should be the education of its students, whereas a for-profit corporation's mission should be the maximization of profit for its investors," said a critic in The Journal of the American Osteopathic Association.  Dr. John Nelson and member of the American Medical Association (AMA) said, "If you were about to lay on an operating table with a scalpel about to invade your body, I would think you would want to know whether the doctor operating on you got a good education." (HeadsUp:  It's wise to find out whether a doctor is a member of the AMA before a visit.) 

6 Things to do to Keep from Becoming a "For-Profit" Cautionary Tale Yourself

While you are a target, you don’t have to be a victim.  Before filling out an application, do some snooping ~

1.  Find out if the discipline/vocation you wish to learn (training) is offered at your local community college.

2.  Compare tuition at community college against the for-profit if the same vocation is offered.

3.  Make sure your school has regional accreditation says Jennifer Abel at Consumer Affairs.com.

4.  See studentaid.com for schools that have been evaluated to have the best score card.

 

5.     Google the name of the school; include the words “investigation,”  “complaints” or “law suit” in the search field.  See a list of for-profit colleges and universities here.

6.     Check on the usefulness of the diploma or certificate and employment success rate of the school you choose.

~Tip~ 

Know someone with student loan debt?  Tell them to resister with the consumer Financial Protection Bureau (CFPB) to get help.

Magic, Miracles & Blessings,

Willette