The burgeoning of the for-profit college industry has wasted billions of taxpayer dollars, sent many thousands of students out into the world with shoddy educations, and made a few people very rich.
One of the organizations that should have been closed down by the U.S. Department of Education is Corinthian Colleges. Here, Peter Greene reviews its sordid history, including the fact that the U.S. Department of Education bailed it out when it needed money, and Corinthian sold off many of its campuses to be run by a DEBT COLLECTION AGENCY. I put that in caps because it is incredible but true.
Greene writes:
“Folks who find themselves in debt for Corinthian educations, but without any marketable skills that would allow them to make money– those folks got in this mess by driving past a dozen corners where there should have been big bright neon red flags. But there were no flags there, because the gatekeepers had taken the flags down and stuffed them in their back pockets.
“Corinthian has a repeatedly gotten in trouble for lying, false advertising, misrepresenting itself, and promising what it could not deliver. But the feds did not shut them down, did not demand they put a warning label on their applications, did not publicly chastise them in a manner that might have given applicants pause. And when Corinthian actually started to suffer the free-market consequences of bad behavior, the feds stepped in to protect not the students, but the investors and operators. They actually crafted a plan to allow Corinthian to draw in more students!
“And the loans? If I go to buy a house, and I visit the bank for a mortgage loan, generally speaking the bank (excepting the years between, say, 2002-2008) will make sure that they don’t lend me more than I can pay, and they will also demand an assessment of the house so that they know I’m getting their money’s worth in my purchase. Who was exercising such oversight of these college loans? Apparently, nobody.”
Diane Ravitch's blog 
See Elizabeth Warren’s excellent explanation of why student loans are treated so differently than others:
http://thedailyshow.cc.com/videos/wb58yw/elizabeth-warren-pt–2
Reblogged this on David R. Taylor-Thoughts on Texas Education.
It’s really interesting to follow the fight between StrikeDebt and the USDOE:
https://twitter.com/StrikeDebt
I don’t know why there haven’t been any charges either. Didn’t the 9 state AG’s who wrote the letter to the USDOE say that they had fraud?
It seems as if it would at least merit an investigation or an inquiry in Congress. Congress has been saying they will regulate for-profit colleges for at least the last 5 years. There have been hearings and reports and studies… what’s the hold up? Why does nothing ever happen?
I know the for-profit college industry is hugely well-connected in both Parties but this is reaching the point where it looks openly corrupt. How long are these blatant rip-offs going to continue?
“Why isn’t anyone going to jail?”
um… these are not teachers who cheated on the almighty tests, that’s why!
“Why Isn’t Anyone Going to Jail?”
Why isn’t sky green?
Why isn’t grass blue?
Why isn’t mode mean?
Why isn’t false true?
“For-Profit colleges”
Junk degrees
And crushing debts
About as sleaz
Zee as it gets
Phoenix flies
Then turns to ash
But never dies
In hunt for cash
I just read that the Bill and Melinda Gates Foundation must get rid of all its money by 20 years after the death of Bill and Melinda Gates and then close its doors. The piece I read said this was rare for foundations. In addition, Buffet has a stipulation that all of his money has to be spent by 10 years after his death.
That means eventually, public education will only have to wage war with the Walton Foundation and any other foundations set up by other billionaire oligarchs who want to destroy public education even a century or more after they are gone.
I don’t know if that means anything in the war against the few versus the many.
To get a sense of how powerful the for-profit lobby is, read this:
“Anita Dunn, a close friend of President Obama and his former White House communications director, worked with Kaplan University, one of the embattled school networks. Jamie Rubin, a major fund-raising bundler for the president’s re-election campaign, met with administration officials about ATI, a college network based in Dallas, in which Mr. Rubin’s private-equity firm has a stake.
A who’s who of Democratic lobbyists — including Richard A. Gephardt, the former House majority leader; John Breaux, the former Louisiana senator; and Tony Podesta, whose brother, John, ran Mr. Obama’s transition team — were hired to buttonhole officials.
And politically well-connected investors, including Donald E. Graham, chief executive of the Washington Post Company, which owns Kaplan, and John Sperling, founder of the University of Phoenix and a longtime friend of the House minority leader, Nancy Pelosi, made impassioned appeals.”
http://www.nytimes.com/2011/12/10/us/politics/for-profit-college-rules-scaled-back-after-lobbying.html
This is why I cannot believe anyone is seriously suggesting we can contract out public schools and it will be on the up and up and “well-regulated”. No, it won’t. Lawmakers will be captured and it will be a free for all. The big losers will be poor people, just as the big losers are poor people in the for-profit college scams.
Ed reformers are freaking kidding themselves with this “well-regulated! non-profits!” fantasy. It’s a weirdly arrogant assumption that they are all honorable and well-intended, so immune to this stuff. They’re not. Immune.
As Alan Greenspan famously said “I have found a flaw” [in my theory that regulation is unnecessary].
And we are all supposed to just accept that he looked in the mirror every morning for 50 years when he shaved and missed the giant zit in the middle of his chin.
I watched that hearing. I don’t know if you’re old enough to have observed his (public) career, but he was treated like an infallible God.
It was embarrassing to watch the fawning deference, and it went on FOR YEARS. They have to stop falling in love with these theories and individuals in government. It’s killing us. They go ga-ga. There’s no restraint.
Yes, I watched Greenspan over the years and was always amazed by how everyone hung on everything that came out of his mouth. Even a burp from Greenspan was enough to lead to the same in the financial markets.
It reminded me of Chauncey Gardiner in ‘Being There” with the primary differences being that Chauncey was honest and had no delusions that he was brilliant — neither of which can be said for Greenspan.
One word: RACKETEERING
Fact: Actually promoted by our politicians
Reasons: $$$$$ and perks reign
Why: NO MORALS whatsoever and politicians lie
Too many professional organizations: Jockeying for a seat at the table
End result: Breakdown of society and a few have total control
Must do: Wake up, opt out, and speak out against tyranny, bad theory, and ridiculous pedagogy.
Chiara: Reading your post, I was reminded of video of George Carlin made over ten years ago in which he describes the wealthy as members of an exclusive club in which the rest of us do not belong You are totally correct making the connection between how the unethical ways the for profit colleges are a road map for the unethical potential collusion to create charter schools. With all the back room deals and mutual hand washing, there is endless potential for the exploitation of the poor and eventually the middle class, if parents don’t stand up to the attacks.
Best Carlin performance ever it describes everything that is happening today perfectly I posted it on this site about a year ago here it is. Everyone who hasn’t seen it please watch. https://www.youtube.com/watch?v=rsL6mKxtOlQ
Way too many conflicts of interest in the US Dept of Ed.
Here is an opportunity for federal intervention that would be welcomed, and they don’t do it. Too busy interfering with teacher evals in my state still or spouting too much propaganda over the benefits of high-stake$ te$ting?
The whole Dept of Ed needs a house cleaning, new ethics rules, and a thorough investigation into their conflicts of interest. Then they need a new mission and a carefully delineated chart of their role in supporting PUBLIC education.
No, the whole Department of Education needs to be GONE. No fixing that disaster. Just let us TEACH!
I disagree that they need to be gone. There are some things that need to be overseen at a federal level, like the racial segregation of education, even though this current Dept of Ed encourages it through charters. But a good, effective Dept of Ed would keep track of that, administer the NAEP, work to make student loans and other financial aid more accessible to students, especially those coming from low-income families or those who fall in the donut hole of too much income but yet not enough, which is where a lot of the middle class falls these days, and monitor that said financial aid is not going to predatory, for-profit institutions like this. But they should be on the side of the students and the teachers, not the profiteers and the self-described “disrupters”, which is where they are currently.
I agree it definitely needs to be abolished period.
Regulators need to go back to seeing their role as adversarial. There’s nothing inherently wrong with an adversarial process. They’re all grown ups, no one should get their feelings hurt.
I’m sick to death of these deals. Regular people don’t get all this elaborate deference in the justice system. They get hammered, every day.
As a college student, I’m as shocked by the system in place as you seem to be. I’ve taken out over $32,000 in loans that I will have to start paying back in 2016, with no foreseeable job prospects because I’m not “unique” enough of a candidate. What really irks me is that I was always told a college education would help me get places in life. So far it only has had the ability of emptying my wallet and providing me the preliminary experience to pursue graduate education and spend even more money for an even more expensive piece of paper. Like all other problems in the education, I hope the problem of paying for college in America is sorted out. Too bad that probably won’t happen until standardized testing is eliminated, which I don’t see happening.
“. . . help me get places in life.”
I bet you never thought one of those places would be debtors prison.
(I’m being allegorical with that). Nor I bet you never thought you’d experience what indentured slaves experienced.
indentured serfs, not slaves, ay ay ay!
Most of the jobs are gone Clinton saw to that with NAFTA and now the TPP will make it even worse. Not to mention Pearson has its greasy meat hooks all over the college scene as well which will undoubtedly increase costs. As a fairly new medical student almost all of my classes mandate a form of online homework known as “Mastering”. It is designed by Pearson and requires a payment of $60 to create an account where the Professor loads homework questions and we as students log on and complete these assignments. It is mandatory and there’s no way around it. However, I have to ask, after purchasing medical textbooks books which cost between 200 and 400 dollars a piece couldn’t the professor just give homework problems out of the book?
Are they computer graded, too?
Do not forget automation in the US manufacturing sector as another reason for job loss. NAFTA and the TPP are not responsible for all job loses, and I think it is arguable that automation is the number one reason for job losses in the US manufacturing sector.
For instance, the manufacturing sector in the US has continued to grow for decades while shedding jobs to automation. It is not common knowledge that the US manufacturing sector is the largest in the world. It may be 2nd place now, but looking at Nation Master reporting on data from 2008, the US had the largest manufacturing output in the world.
China was in 4th place in 2009.
http://www.nationmaster.com/country-info/stats/Industry/Manufacturing-output
For 2013, the Global Manufacturing Competitiveness Index listed the US in 3rd place behind China and Germany for current competitiveness. 237 countries were ranked.
Click to access gx_2013%20Global%20Manufacturing%20Competitiveness%20Index_11_15_12.pdf
I think the corporate education reformers would claim that 3rd place for global competitiveness in manufacturing means the U.S. needs to give our children more tests and fire more teachers. Being ranked in the top 1.3% ahead of 98.7% of the world would not satisfy these people, and they would make it look like the end of the world so they could fire more teachers, defeat the teachers’ unions and close more public school to get at that public money.
Yes it is computer graded and full of bugs to the core which affect individual student scores. Mastering by Pearson is a disaster.
“Why isn’t anyone going to jail?”
ANSWER: This is what happens when a political machine built by money from billionaire oligarchs elects people in high places who appoint the attorney general of a state or the United States.
The courts don’t file law suites. Attorneys do. If you own the elected representatives who pick the attornies that file the court cases, then you control the pathway to court.
A more accurate question would be “why isn’t any wealthy individual going to jail?”
But of course, in America, that is like asking why isn’t grass blue?
:o)
Ask Kentucky about blue grass.
ha ha ha ha!
I forgot about the state where grass is blue — and so, undoubtedly, are the parents.
Kentucky just banned test opt-out.
Kentuckians Against Common Core
https://www.facebook.com/KentuckiansAgainstCommonCore
The Move to Opt Out Kentucky
https://www.facebook.com/themovetooptoutmaysvilleky
FairTest for Kentucky
http://fairtest.org/search/node/Kentucky
Personally, I prefer my grass to have a purple tinge.
The GI bill provided a chance for these for profit colleges to cash in.
Too, as someone recently pointed out – when interest rates are historical lows college students pay 7% interest on their loans. ]Elizabeth Warren for one.]
AND politicians claim to have a great interest in “improving” education. Government provides less and less money to colleges, interfere with a college system that was the gem of the world, students coming here from all over the world to get the best education.
Now politicians claim to know more than the professors in colleges.
It is not only public school teachers but college professors who are getting whacked. So very much at the collegiate level is being devastated now. Books can, should be written about it
but
that would doubtless make no difference to those preying on public money.
This blog is stupid. NON-PROFIT colleges are far worse. Google “campus rape allegations” or “academic fraud” or “Top 10 Highest Paid University Presidents” and find me 1 story that mentions a for-profit college. They waste billions of taxpayer money on useless campus amenities like tanning salons and rock climbing gyms, pumping out pointless liberal arts degrees, but somehow Liberals always turn their sights on anything that makes a profit. It’s that anti-capitalism rhetoric that ignores the injustice of socialism and corrupt Democrats like Elizabeth Warren, who conveniently stopped short of calling on financial measures for non-profit colleges because she knows which PACs and special interest groups line her pocket. Idiots.
Sarah,
I googled for-profit presidents’s salaries and they were far higher than those of presidents of nonprofits, in the range of $3-6 million annually. http://banktalk.org/content/university-president-salaries
Five years ago, the president of for-profit Bridgepoint Education, was making $20 million a year: http://www.cnbc.com/id/40680879
This article in Huff Post shows that the for-profit presidents have high salaries and their institutions have low graduation rates: http://www.huffingtonpost.com/2012/01/30/for-profit-college-compensation_n_1229284.html
“This blog is stupid.” You can opt out. Don’t read it.
I was talking to a store clerk the other day and when she found out that I am in education, she had a question. She wanted to know what she could do. The college she had attended for four years had lost its accreditation, changed its name and looks to be headed for closure. She has enough credits to graduate but still owes the school $9000 that accrued for classes after her federal aid ran out. She can’t graduate until she pays that off. Her education was paid for with federal grants and loans. She is looking for a way to get her degree but is working as a retail clerk and has no extra money. Her coworker is in the same position with another college. Two young women who each made the effort to prepare for a good job and future are left in debt, with job prospects no different than if they hadn’t bothered. In the meantime the college, really its “investors,” have the money from our tax dollars. I didn’t know what to tell her other than to contact the state attorney general and the USDOE.