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Aaron Ament: Protect Students, Not Predatory Colleges

By dianeravitch
May 19, 2018 //
7

Aaron Ament wrote an article in the New York Times about the U.S. Department of Education’s abandonment of students who were defrauded by predatory for-profit colleges. Ament worked on these issues during the Obama administration.

“In 2016, after years of broken promises, deceptive recruiting practices and exponential growth in the for-profit college sector, things seemed to be changing for the better.

“Spurred by the creation of a unit in the Department of Education devoted to cracking down on predatory institutions, and the announcement of new protections for students, some of the biggest names in the industry voluntarily ended some of their most egregious practices or shut down, while others reached sweeping settlements with the government.

“Today, that investigative unit, which I helped create, is virtually dead. Its members have largely been assigned to other tasks by an Education Department that includes an alarming number of executives from those very same for-profit schools.

“The unit is the latest casualty of an administration that seems to think that big corporations need protection from consumers, rather than the other way around….

“In 2013, I took a job as a lawyer for the Education Department. Soon after, I started working with the California attorney general’s office to investigate fraud at Corinthian Colleges, based in Santa Ana.

“We learned the situation was worse than could be imagined at this publicly traded for-profit chain, which at the time was the beneficiary of more than $1 billion a year in federal student loans and grants.

“We heard of students recruited out of homeless shelters with false promises of jobs, and of others stashed in temporary jobs for less than a week so that the school could include them in the job placement rate it had to disclose to regulators and prospective students.

“These students would go on to amass student loan debt that their bleak job prospects would never help them repay….

“In 2013, I took a job as a lawyer for the Education Department. Soon after, I started working with the California attorney general’s office to investigate fraud at Corinthian Colleges, based in Santa Ana.

“We learned the situation was worse than could be imagined at this publicly traded for-profit chain, which at the time was the beneficiary of more than $1 billion a year in federal student loans and grants.

“We heard of students recruited out of homeless shelters with false promises of jobs, and of others stashed in temporary jobs for less than a week so that the school could include them in the job placement rate it had to disclose to regulators and prospective students.

“These students would go on to amass student loan debt that their bleak job prospects would never help them repay….

“Consider what happened at the for-profit DeVry University. Murray Hastie, an Iraq war veteran suffering from post-traumatic stress disorder, was aggressively recruited by DeVry. Mr. Hastie was told that his G.I. Bill benefits would cover all of his tuition, in addition to giving him a monthly living stipend.

“However, he later learned DeVry was saddling him with more than $50,000 in student loans. When his P.T.S.D. worsened, Mr. Hastie left the school and sought treatment at a V.A. hospital. After leaving the hospital, he recounted in a forthcoming documentary, “Fail State,” he tried to enroll at his local community college, but found that all of his G.I. benefits had been exhausted….

“After Ms. DeVos took over, she hired several executives from the same for-profit institutions that the department was investigating. Former employees of Bridgepoint Education and Career Education Corporation, which both run for-profit colleges that were reportedly under investigation, are now working for her. Investigations into those colleges seem to have been dropped. A former DeVry dean supervised the very unit that is now being dismantled.

“At the same time, Secretary DeVos is also trying to bar students and state attorneys general from suing for-profit student loan servicers. And at the Consumer Financial Protection Bureau, Mick Mulvaney has weakened the office assigned to protect students from financial abuse.

“Predatory colleges are being given a green light to return to their abusive ways. The message to millions of Americans lured by the false promises of predatory companies is clear: The Trump administration is not on your side.”

Categories Accountability, Education Industry, Education Reform, For-Profit, Fraud, Higher Education

Why For-Profit Higher Education is a Rip-Off and a Sham

By dianeravitch
May 17, 2018 //
5

The U.S. Education Department’s accreditation advisory committee will discuss the conversion of for-profit colleges to non-profit status at a meeting from May 22-24. The chair of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) is Art Keiser, the chancellor and CEO of Keiser University. This Florida-based school converted from for-profit to non-profit status in 2011, which is the subject of the discussion. Some Senate Democrats, led by Senator Elizabeth Warren, have urged that he recuse himself, since he obviously has a conflict of interest. Secretary DeVos will decide whether he does. Or will he have the decency to do it himself? What could possibly be dubious about a college headed by its founder and namesake?

Keiser for many years was the face of for-profit higher education, even chaired the for-profit’s lobbying group in D.C., and now he in charge of regulating the industry? What a bad joke Betsy DeVos has pulled on the nation. Keiser led the way in converting his own namesake institution from for-profit to non-profit, but the Miami Herald reported that it was still lucrative.

Robert Shireman of the Century Foundation developed a very informative and important graphic about the sham of converting colleges from for-profit to non-profit. You should see it. The link is at the end of this post.

In his email to me, he noted the similarities between ostensibly non-profit charters that are actually managed by a for-profit, and “colleges” that convert to non-profit status yet remain for profit in fact.

He makes the following points:

1. The abuses of students and taxpayers have occurred predominantly at for-profit colleges.

2. That’s because removing investors from power positions in schools (being nonprofit) reduces the incentives for exploitative and predatory practices.

3. For-profit colleges want the “nonprofit” label but without properly separating profit from corporate control.

He adds, “These problems keep recurring over history. NACIQI’s leadership is needed to assure that nonprofits, at least, are safe for students and taxpayers.”

But, can NACIQI regulate these institutions, as it is supposed to do, when its chair heads an institution that is an exemplar of the institutions under investigation?

Read the report here.

Categories For-Profit, Fraud, Higher Education

Ohio: K12 Inc Asks State for Exemption for Transfers from Closed ECOT

By dianeravitch
May 16, 2018 //
16

The largest virtual charter school in Ohio was the Electronic Classroom of Tomorrow (ECOT). Its for-profit owner William Lager collected over $1 billion in taxpayer dollars since it opened in 2000. He gave campaign contributions to state officials, and they looked the other way. They even spoke at his commencement ceremonies. When the state actually audited ECOT, it found inflated enrollments and went to court to collect money from Lager. ECOT lost its authorizer, and Lager declared bankruptcy.

Most of ECOT’s students have transferred to another online charter, the Ohio Virtual Academy, owned by Michael Milken’s for-profit K12 Inc.

K12 Inc. has asked the state to hold it harmless for the expected low academic performance of the transfer students from ECOT.

Will voters hold state officials accountable for allowing these frauds to continue collecting money from them?

Categories Accountability, Failure, For-Profit, Fraud, Ohio, Virtual Charter Schools

DeVos Puts Former For-Profit Executive in Charge of Undoing Regulations that Protect Students Defrauded by His Former Employer

By dianeravitch
May 15, 2018 //
26

This is a scandal.

When Betsy DeVos was appointed as Secretary of Education, she held investments in the for-profit higher education sector, which is known for fraud, high attrition, and low graduation rates. Presumably, she divested, but it is not clear whether she did.

Now she has turned over the job of revising regulations of the for-profit colleges to former high-level executives from the same sector.

Does anyone doubt that their mission is to remove all constraints on these quasi-criminal enterprises that have defrauded millions of students and gotten away scot-free?

Education Department adviser Robert Eitel, hired by the Trump administration last February after four years in the for-profit college industry, played a role in suspending an Obama-era policy known as “borrower defense to repayment.” The rule made it easier for students, enticed into taking out five-figure loans on promises that they would get good jobs, to file for debt relief. It also allowed the government to recoup the losses from the schools.

Ultimately, those potentially most impacted include many predominantly low-income, and minority students disproportionately represented at for-profit colleges and often saddled with high student loans and facing poor job prospects.

Education policy changes involving for-profit colleges has been a touchy subject since Secretary Betsy DeVos, who entered office with investments tied to the for-profit college sector, took over the department following Trump’s election.

The revelations about Eitel’s engagement in borrower defense policy come on the heels of a New York Times report that the department has been dismantling a team investigating widespread abuses by for-profit colleges. Education spokeswoman Liz Hill told the Times the group shrunk because of attrition and said no new hires with ties to the for-profit college industry had influenced the group’s work.

Eitel, who had also worked as an Education Department attorney under President George W. Bush, isn’t the only for-profit college executive DeVos has brought into the Department. The secretary also drew ire when she tapped Julian Schmoke, Jr., a former dean at the for-profit college DeVry, to lead the department’s Student Aid Enforcement Unit last August.

There’s no indication Schmoke was involved in the delay of the borrower defense rule.

Eitel — a former vice president at two for-profit college operators, Bridgepoint Education and Career Education Corp. — joined the Trump administration in February as part of a so-called “beachhead team” formed to usher the agency through the transition.

For two months, he worked at the Education Department while on unpaid leave from Bridgepoint, according to financial disclosure forms. He formally gave up his position at Bridgepoint in April, when he was hired on a permanent basis as a senior adviser to DeVos.

Although Education Departments ethics officials maintain working on borrower defense wouldn’t have violated his ethics agreement, Eitel has up until now refused to say publicly whether he had a hand in the borrower defense delay.

Eitel’s Involvement in Borrower Defense

On June 14, DeVos announced she was suspending the borrower defense rule, arguing that under the rule, “all one had to do was raise his or her hands to be entitled to so-called free-money.”

Emails obtained by the executive branch watchdog group Democracy Forward and shared with ABC News show in the days leading up to the announcement, Eitel circulated borrower defense talking points to staffers, edited background documents, and even signed off on the official delay notice.

This is a classic case of the fox guarding the henhouse. Or worse.

Is this Trump University’s Revenge?

Categories Betsy DeVos, Education Industry, For-Profit, Fraud, Higher Education, Privatization, Student Financial Aid and Student Debt

What You Need to Know About the Top Charter Chain in the Nation

By dianeravitch
May 15, 2018 //
38

The highest ranked charters in the nation, based on graduation rates, test scores, AP courses passed, etc., are the BASIS schools of Arizona.

Two articles tell you what you need to know to understand their “secret sauce.”

Carol Burris reports here on their demographics and attrition rate. Their top-performing schools are overwhelmingly white and Asian, with few Hispanic, African American, or Native American students, and few students with disabilities. They lose most of their students between 7th grade and 12th grade.

Craig Harris of the Arizona Republic details the BASIS business model here. The charters are owned by a private, for-profit company created by the founders Michael and Olga Block. They collect a sizable portion of the schools’ revenues (“According to an agreement between Basis Schools and Basis.ed, the Blocks’ private firm keeps 11.75 percent of all school revenues — state, federal and local tax dollars — for management fees”). They recently bought an $8.4 Million condo in New York City to be closer to private schools they own there. Their company, the article says, received $14 million in management fees last year. The charters pay their teachers less than the average Arizona teachers’ salary, but they are less experienced. Teachers get more money because parents are asked to donate $1,500 per student per year, which is a bargain compared to private schools. Teachers get a bonus of $200 whenever a student gets a 5 on an AP exam. The average BASIS student takes a dozen AP exams and passes nearly all of them.

A reader on the blog added this comment:

Basis, the #1 school in the nation by Newsweek Magazine, 2017, graduated 44 students. 18 whites, the rest mostly Asians. No ELL, No Special Ed. Less than 8% Black/Hispanics. No free or reduced lunch. So, basically we’re saying privileged, upper socio-economic, gifted students.
In my last year of teaching, I had 45 in one room with 30 desks, not enough old texts to teach. Didn’t stay that way all year, but enough to impact teaching & learning.

Basis only teaches the gifted. Look a little deeper.

There you have it. The secret sauce. Accept everyone who applies. Get rid of the students who are unlikely to pass AP exams. Hire young teachers and pay less than underpaid public school teachers. Pay a bonus whenever students get a 5 on an AP exam. Create a culture of testtaking. Drop those who can’t do it. Solicit money from parents to pay teachers more.

Is it a model for public education? No. Public schools must keep all students, not just those most likely to pass tests.

Categories Accountability, Arizona, Charter Schools, Education Industry, For-Profit, Privatization

Betsy Dismantles Team Investigating Fraud at For-Profit Colleges

By dianeravitch
May 14, 2018 //
16

Betsy DeVos has broken up the team investigating fraud at for-profit colleges. To neutralize the investigation, she appointed a veteran of a for-profit college to lead the team.

Question: Why is she protecting the fraudsters instead of the students?

Categories Accountability, Betsy DeVos, For-Profit, Higher Education

Arizona Voters: Did You Pay for the $8.4 Million NYC Condo for BASIS Charter Founders?

By dianeravitch
May 9, 2018 //
86

Columnist E.J. Montini of the Arizona Republic is all over the charter scams that are common in his state.

One of his favorite subjects is the BASIS charter chain, which is regularly lauded by the national media as sponsor of the number one high schooling the nation, because of the AP courses that its students pass. Montini knows that BASIS regularly weeds out the students it doesn’t want by setting expectations higher than most students can meet.

He also knows that BASIS is a honeypot for its founders.

Look at the folks who founded Basis Charter Schools, Michael and Olga Block.

These are public schools.

They’re funded with tax dollars. Your money.

In fact, as The Arizona Republic’s Craig Harris pointed out in a May 7 article, Basis receives more in basic per-pupil funding than traditional public schools.

At the same time, Basis asks parents to “donate” at least $1,500 per child each year, which it says is used to improve teacher pay.

Sort of a de facto tuition that is way, way cheaper than private school (because taxpayers are funding the rest.)

Essentially, Basis Charter Schools, a tax-exempt non-profit corporation, gets to operate like a private company while using the public’s money. And the founders — among others affiliated with the operation — have done very well.

As Harris so succinctly pointed out:

As Scottsdale parents were receiving yet another solicitation for donations to pay teachers, the Blocks made a $1.68 million down payment on an $8.4 million condominium in New York City, property records show.

Their Manhattan home is in a 60-story building with “breathtaking panoramas” of the city, an infinity pool, and an indoor/outdoor theater, according to a sales brochure. It is located near two private Basis schools controlled by the Blocks. Tuition at those schools is more than $30,000 a year

.

Arizona has little to no accountability for charter schools. They can use public money to build new buildings, which then are private property. They can use public money to pay their family members or themselves. No one cares. The state makes rules, but if no one follows them, that’s okay. The audits are a joke or don’t happen. It’s a scam, Montini writes.

The owners get to pay themselves with your money, hire their relatives, avoid the bidding process for work and make very little of their financial practice available for you to see.

It’s the opposite of regular public schools

It’s a perfect scam. The opposite of regular public schools. Lawmakers and politicians like Gov. Doug Ducey go along with it because they hate teacher unions and because charter owners are big supporters of their careers.

But ask yourself this:

Who was the last person working in a regular public school who could afford a house in Tucson, a house in Scottsdale and an $8.4 million condo in New York City with “breathtaking panoramas?”

As long as their schools produce high test scores, who cares about the money, right?

Categories Accountability, Arizona, Charter Schools, Education Industry, For-Profit, Privatization

Jan Resseger: Betsy DeVos Hires the Fox to Guard the For-Profit Higher Education Henhouse

By dianeravitch
May 6, 2018 //
2

 

Jan Resseger writes here about the sordid decision to hire people closely aligned with the interests of the for-profit higher education industry to regulate it. This amounts to hiring the fox to supervise the henhouse. This industry is known for predatory behavior, targeting the most vulnerable students: veterans, their widows, the poor. It is also known for providing subpar education and printing diplomas that are often worthless. Think Trump University.

We are approaching a level of spoils, squalor, and legal corruption that has not been seen since the days of Teapot Dome.

Categories Betsy DeVos, Education Reform, For-Profit, Fraud, Higher Education

Financial Forecast for K12 Inc. Looking Bleak

By dianeravitch
April 27, 2018 //
16

 

The nation’s largest virtual charter chain, K12 Inc., has consistently gotten low marks for its academic results. Founded by junk bond king Michael Milken, it is listed on the New York Stock Exchange. It is a for-profit business, but according to this financial report, its future profitability is in doubt.

“Summary

“Two days ago, we revealed multiple K12 school closures and a first ever union contract that we estimate will lead K12 to lose money in fiscal 2019 and beyond.

“Yesterday, we learned of another school closing; we estimate this non-managed school will reduce revenue by another $7 Million and operating income $5 Million.

“We were told the school was closing due to its inability to meet academic standards, marking yet another failed chapter in the virtual charter school story.

“More Bad News For K12’s Fiscal 2019

“On Monday, we released a report that disclosed five K12 (NYSE:LRN) schools that are closing or at risk of closing after this school year and a first ever union contract for the California Virtual Academies. We estimate that the lost revenue and increased expenses will cause pre-tax earnings to decline $20 Million and lead K12 to lose money in fiscal 2019 and beyond.

“Yesterday, we were told of yet another school closing. A parent of the Texas Virtual Academy (TVA) 3-8 Campus told us that, according to a letter from the school, it will be closing after the school year due to an inability to meet academic standards.

“We called K12, who partners with the school’s operator, and the enrollment specialist confirmed that the school is closing.”

In 2014, the NCAA announced that it would no longer accept credits accrued by student athletes at 24 K12 Inc. virtual charters.

Categories For-Profit, K12 Inc., Virtual Charter Schools

Ohio: Gubernatorial Candidate Proposes Ban on Campaign Contributions by Charter Operators

By dianeravitch
April 24, 2018 //
14

 

Now, here is a startling and welcome development. Dennis Kucinich, who is running for Governor of Ohio, has proposed a complete ban on campaign contributions by charter operators. If charter operators couldn’t give campaign contributions, they would not be able to buy legislators or other state officials. Since public schools can’t make campaign contributions, that would level the playing field.

Are the voters of Ohio sick of charter corruption yet?

Charter school officials would be banned from making campaign contributions under a sweeping plan unveiled today by Democratic gubernatorial candidate Dennis Kucinich.

The former congressman and Cleveland mayor also wants a statewide vote on a constitutional amendment that would allow local school boards to decide whether they even want charter schools, which are privately operated but funded with taxpayer dollars.

“Ohio public educational funding has been subverted by special interest groups and for-profit charter school management companies, who through campaign contributions have, in the past decade, normalized the privatization of public education funding, creating an often substandard, for-profit system ‘education’ system, using and misusing billions of dollars in public funds,” Kucinich said.

“The normalization of what is essentially a wholly corrupt system constitutes one of the greatest scandals in the history of the state of Ohio because billions of public funds have been diverted away from public education and have enriched private, for-profit enterprises.”

He pointed to the founder of ECOT, the online charter school forced to close last month, who gave hundreds of thousands of dollars to state lawmakers who enabled lax oversight and the diversion of money from local school districts to charter schools.

“Any local school board member, member of the General Assembly, or employee of the Ohio Department of Education who accepts any payment, gratuity, or campaign contribution with a value of more than one dollar, or any pecuniary benefit in excess of one dollar from the operator of a charter school or on behalf of such entities will be subject to forfeiting any state benefit, including salary and pension,” Kucinich said.

He said he will ask the legislature to return to the public election of all members of the state school board, which was the case from 1956 to 1996, when governors were given the power to appoint several board members. Ironically, just two days ago Gov. John Kasich pushed to allow the governor to choose the entire board, because voters have no idea of for whom they are voting.

Kucinich pledged to “shine a light on the corrupt system that allows millions of taxpayer dollars to flow into the pockets of profiteering private charter operators, and then, into the political campaign coffers of politicians, all at the expense of local taxpayers, Ohio’s children, and quality public education.”

His running mate, Akron City Councilwoman Tara Samples, worked as a paralegal and board liaison for White Hat Management, long one of the state’s leading charter-school operators under Akron industrialist and major Republican campaign donor David Brennan.

Categories Accountability, Charter Schools, Corruption, Education Industry, For-Profit, Ohio, Politics, Privatization
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