Trevor Noah of the Daily Show explains here in a short video everything you need to know about Betsy DeVos’s decision to terminate the unit investigating fraud in the for-profit college sector. This is an example of a video conveying more than thousands of words.
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Bill Black, a specialist in white-collar crime, discusses Betsy DeVos’ plan to dismantle the U.S. Department of Education team investigating fraud at those predatory for-profit colleges and to staff the Department with veterans of the institutions under investigation. Like many people, I have described her actions as “putting the fox in charge of the henhouse.” Black says it is far worse than that. The right metaphor, he says, is putting the vampire in charge of the blood bank. What is happening now is not just a policy dispute; it is a deliberate program to protect institutional behavior that should be treated as criminal fraud. The victims are college students who are poor and middle-class, who have every right to expect that the government will protect them against fraud, not enable the fraud.
This is only a part of the interview. Open the link and read the rest.
GREGORY WILPERT: It’s The Real News Network. I’m Greg Wilpert, coming to you from Quito, Ecuador. The U.S. Department of Education, under the leadership of Education Secretary Betsy DeVos, is halting investigations into fraudulent practices of for-profit colleges, according to a report that the New York Times released last Sunday. The Obama administration’s Education Department had placed a special team in charge of investigating false advertising, deceptive recruitment practices, and false job placement claims at for-profit colleges. One of the most prominent investigations was the DeVry Education Group, recently renamed Adtalem Global Education, which is one of the largest for-profit educational companies in the world, with nearly two billion dollars in annual revenues.
Joining me to analyze the consequences of abandoning these investigations into for-profit colleges is Bill Black. Bill is a white-collar criminologist, former financial regulator, and associate professor of economics and law at the University of Missouri, Kansas City. He’s also the author of the book, The Best Way to Rob a Bank Is to Own One. Thanks for joining us again, Bill.
BILL BLACK: Thank you.
GREGORY WILPERT: So, one interesting aspect of the story is that Education Secretary, Betsy DeVos, hired several people from for-profit education institutions to work in the Department of Education. These include Robert Eitel, her senior counselor, Diane Auer Jones, a senior advisor on post-secondary education, and Carlos Muñiz, as the department’s general counsel. What’s going on here? Shouldn’t these appointments be considered conflict of interest and ring all kinds of ethics bills?
BILL BLACK: So first, ten seconds of personal privilege to welcome into the world, three hours ago, Heidi Weaver, our new granddaughter. Second, I made the easiest prediction of my life, after Trump was elected, that Warren Harding and Ulysses Grant could rest easy in the history books because there would no longer be a debate about the most corrupt administration in U.S. history. It would clearly be the Trump administration. There’s been a lot of focus on Scott Pruitt over at the EPA, in terms of corruption. But Betsy DeVos is giving him a consistent run for the money, just more under the radar.
So, here’s the background. First, out of the great financial crisis of 2008, one of the extraordinary things was that the most devastated people, in terms of loss of wealth, were not folks without college degrees, but actually folks with college degrees, who were either Latinx or Black. If you were Latinx, your average loss of wealth during the financial crisis, if you had a college degree, was nearly eighty percent. And it was roughly sixty percent if you were Black. That reversed the pattern for whites, where if you had a college degree, your percentage loss of wealth was lower than whites who had no college degree.
Now, part of that, of course, is the mortgage markets- being put into predatory mortgages at the worst possible time, at the peak of the bubble. But another thing, major thing, in terms of Blacks and Latinos, is that they are- disproportionately, they go to for-profit universities. And for-profit universities, characteristically- and this isn’t just recently, this goes back to World War II era, just after World War II when for-profit colleges first became a substantial deal.
And here’s the triple-whammy you get. One, they are much more expensive than regular universities. Two, you get a- statistically, a much, much worse education. That means your prospects in terms of jobs are far worse. And third, you’re left in massive debt because of the combination of the first two things. So that, instead of being the route to success, it is, as those overall statistics I cited, been an enormously good way of losing extraordinary amount of wealth between the mortgage markets and these for-profit universities.
So, long before the Obama administration came in, people have been writing about the really high incidents of fraud in these for-profit universities. The GAO actually sent undercover investigators that pretended to be people applying for college, which is, of course, really easy to send in testers of that kind. In every single case- so, I think they send them into the eight largest. In every single case, the supposed student was induced to do something that would be a false representation, which is to say, a crime.
In three of the eight cases, at least, the college counselor for the for-profit university consciously, expressly told them to lie and how to lie. Subsequent investigations under the Obama administration have documented the widespread layers of fraud, and for-profit universities have finally begun to experience what they should, which is that it’s very difficult- it’s more difficult to con people, and the government was finally cracking down. And that was- the problem was finally being reduced, and indeed there was some remedy at the federal level.
Because, after all, these are students had been induced by fraud to get into situations where they were literally driven bankrupt by the combination of expenses, debts, and limited increased employment prospects. And as viewers will, I hope, remember, the Republicans changed the bankruptcy laws so that student debt is not dischargeable in bankruptcy. So this, you know, is a cloud that stays over your entire life if it forces you into bankruptcy, from which you make never economically recover.
So, finally there was some recognition at the federal level that it was completely inappropriate to allow these entities to drive you bankrupt through what had been fraudulent misrepresentations to the students. And all for-profit universities live- I mean, and I mean almost totally live on federal grants to the students for education. Without those federal grants, no major chain of for-profit universities could exist. So, we’re really subsidizing all of these fraudulent entities through federal grants. And you would think an administration that A, promised to drain the swamp, and B, to stop these kind of rip-offs of the public sector, would crack down. But of course, none of us is surprised at this point to learn that it’s exactly the opposite.
The metaphor usually used is that DeVos has put the fox in charge of the chicken coop. But it’s really more- the way these for-profit universities operate, it’s more like you would put the vampires in charge of the blood bank, because they are basically sopping up the lifeblood of middle and working-class, and even poor people, through this device of the for-profit fraudulent rip-offs. And Betsy DeVos is now ensuring that the vampires can do this with absolute impunity from the laws.
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.”
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.
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?
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?
Sylvia Bloom, a 96-year-old legal secretary from Brooklyn, left $8.2 Million to one of New York City’s oldest settlement houses, the Henry Street Settlement on the Lower East Side, to be used for college scholarships. It was the largest single gift to the settlement house in its 125-year history. No one, not even family and friends, knew she had amassed a fortune. She lived frugally. She worked for the same law firm for 67 years. When her boss picked a stock, she made the call, placed the order, and bought a few shares for herself.
Two additional scholarships will be established.
She attended free public schools and free public college at Hunter College, which is no longer free. One of the other scholarship funds will be established at Hunter.
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.
After years of denying that the Koch Foundation exercised control of hiring and firing professors by giving millions of dollars, George Mason University was compelled by the release of documents to admit that it was true.
“Virginia’s largest public university granted the conservative Charles Koch Foundation a say in the hiring and firing of professors in exchange for millions of dollars in donations, according to newly released documents.
“The release of donor agreements between George Mason University and the foundation follows years of denials by university administrators that Koch foundation donations inhibit academic freedom.
“University President Angel Cabrera wrote a note to faculty Friday night saying the agreements “fall short of the standards of academic independence I expect any gift to meet.” The admission came three days after a judge scrutinized the university’s earlier refusal to release any documents.
”The newly released agreements spell out million-dollar deals in which the Koch Foundation endows a fund to pay the salary of one or more professors at the university’s Mercatus Center, a free-market think tank. The agreements require creation of five-member selection committees to choose the professors and grant the donors the right to name two of the committee members.
“The Koch Foundation enjoyed similar appointment rights to advisory boards that had the right under the agreements to recommend firing a professor who failed to live up to standards.
“Cabrera emphasized in his note to faculty that the “agreements did not give donors control over academic decisions” — an apparent reference to the fact that the Koch Foundation did not control a majority of seats on the selection committees.
“A university spokesman said Cabrera was unavailable for an interview. On Monday night, Cabrera issued a statement saying he is ordering a review of all the university’s donor agreements that support faculty positions to “ensure that they do not grant donors undue influence in academic matters.”
“Cabrera’s admission that the agreements fall short of standards for academic independence is a stark departure from his earlier statements on the issue. In a 2014 blog post on the issue, he wrote that donors don’t get to decide who is hired and that “these rules are an essential part of our academic integrity. If these rules are not acceptable, we simply don’t accept the gift. Academic freedom is never for sale. Period.”
“In 2016, in an interview with The Associated Press, he denied that the Koch donations restricted academic independence and said Koch’s status as a lightning rod for his support of Republican candidates is the only reason people question the donations.
“The documents were released to a former student, Samantha Parsons, under a Freedom of Information Act request she filed earlier this year after years of having similar requests rejected.“Parsons, who now works for the activist group UnKoch My Campus, said the documents are strikingly similar to agreements the Koch Foundation made with Florida State University that caused a similar uproar.
“She said provisions giving the foundation a say in which professors are chosen are especially alarming.
“The faculty is supposed to have the independence to choose the best-qualified candidate,” she said.”
The University recently renamed its law school for the late conservative Supreme Justice Antonin Scalia. This occurred following a Koch gift of $10 Million, plus $20 Million from an anonymous donor.
Some 300 colleges have accepted Koch funding.
When Duke historian Nancy MacLean wrote “Democracy in Chains,” criticizing the Koch-funded economist James Buchanan, she was viciously attacked by libertarians for her portrayal of Buchanan as anti-democratic and unduly influenced by Koch libertarianism. She must be smiling as the mask of impartial scholarship is stripped away by student activists.
I recently visited Western Michigan University in Kalamazoo, Michigan, where I learned about a very successful program called “The Kalamazoo Promise.”
The concept is simple: Every student who attends the Kalamazoo Public Schools from kindergarten through senior year and graduates receives a full scholarship for any public or private university in Michigan where he or she is accepted. All costs, tuition, books, fees, are covered. For those who attend the KPS schools for four years of high school, 65% of tuition is covered.
The donor or donors are anonymous. They do not seek recognition or honor.
The effects of the Promise have been impressive. Enrollment in KPS, which had been declining before the Promise was launched in 2005, has increased by 25%. A pre-kindergarten program has been adopted by the schools. Students are working purposefully, knowing that they can win a debt-free college education if they persist. Parents, teachers, and the community are collaborating around the goal of student success. The Promise is available to students for two-year colleges, trade schools, or four-year colleges. It can be used at any point for ten years after graduation.
When I spoke in Seattle, I recommended that someone in the audience tell Bill Gates about the Kalamazoo Promise. It is far more successful and appreciated than any of his interventions into education. Without breaking a sweat, Bill Gates could launch the Washington State Promise and guarantee every high school graduate in the state a debt-free college education. Instead of being a goat for sinking billions into test-based teacher evaluation (which failed), Common Core (the reform that dare not speak its name), and charter schools (which are highly controversial and often ineffectual), he would be universally praised for making postsecondary education available at no cost to all high school graduates in the state. Washington State has no income taxes and no corporate taxes. This would be a swell way to give back.
For all those billionaires out there looking for a sound way to invest in education, explore the Kalamazoo Promise. We know that more and more students need a postsecondary education to succeed in the twenty-first century, and we know that the cost of that education burdens students with intolerable debt. Stepping in to aid students to reach that dream is a win-win.
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