The Orange County Register reports that student complaints about Education Management Corporation (EDMC)'s Art Institute campuses form the basis for federal lawsuits pending against the school. The paper details the experience of Brendan Bieri, a student at the Art Institute of California, who told the Register that at the time of enrollment, he was advised by an enrollment counselor that "if he enrolled to earn a degree in visual game programming, Bieri would learn animation from professionals who had worked for Disney. The program at the Santa Ana campus was so good, the counselor said, that 95 percent of graduates quickly land a job. Three years later, Bieri graduated with $90,000 in loans and found that few of the recruiter’s predictions came true. He is now helping his dad start an Alaskan company that sells smoked salmon dog treats, while quickly falling behind on his loans. " EDMC contends that the lawsuits have no merit and that the Art Institute has a strong record of success in building careers.
In an editorial, The New York Times has criticized efforts by the for-profit college industry to weaken new proposed federal regulations while urging the Obama Administration to enact even tougher standards aimed at reining in the predatory practices at many colleges and trade schools that have sent millions of adults into heavy debt with minimal job prospects. In its editorial, The Times wrote: "The for-profit college industry is pressuring the Obama administration to water down proposed new rules that would deny federal student aid to career training programs that saddle students with crippling debt while giving them useless credentials. That’s a potent threat from the government, given that for-profit schools can get as much as 90 percent of their revenue from federal student aid programs. But it doesn’t go far enough. The administration should actually strengthen the rules to put the worst actors in this industry under tighter scrutiny. The proposed rules require career training programs to meet two reasonable standards to remain eligible for federal aid. The estimated annual loan payment of the typical graduate should not exceed 20 percent of discretionary earnings, or 8 percent of total annual earnings. And the default rate for former students should not exceed 30 percent. The overall approach is sound. But the percentage of people who are actually paying down their loans should also be taken into account to make sure that students are earning enough money to meet their responsibilities. If the repayment rate is left out of the picture, schools might escape sanctions by putting students in temporary forbearance programs that push loan defaults into the future. The for-profit industry is fighting hard against even the more limited proposed rules, and it is lobbying Congress to stop them. It claims that the new federal requirements would limit educational opportunity, particularly for poor minority students who might not qualify for traditional private or public colleges. The facts, however, show that for-profit schools often hurt the poor by luring them into questionable programs that cost considerably more than comparable courses of study at community colleges. According to federal data, graduates of two-year, for-profit career training programs average a loan debt of $23,590. By contrast, most community-college graduates owe nothing.The Department of Education recently reported that, of the thousands of for-profit programs it analyzed, an astonishing 72 percent produced graduates who, on average, earned less than a high school dropout who worked full time. This means that the most debt-ridden students are unlikely to earn enough to ever repay their loans. While students at for-profit colleges are 13 percent of the total higher education enrollment, they account for nearly half of all student loan defaults.The department’s analysis, which covered both for-profit and nonprofit career programs, found that 98 percent of the students enrolled in the lowest-performing programs are in for-profit schools. And among the certificate programs most commonly found to be substandard are the ones that typically advertise on buses and subways in cities all over the country, targeting less sophisticated audiences; these include programs that claim to train cosmetologists, medical assistants, paralegals and other fields. For the sake of poor students and their families all over the country, the Obama administration needs to issue strong rules that will push substandard programs to improve and force predatory schools out of business."
Massachusetts attorney general Martha Coakley has filed a lawsuit against one of the nation's largest for-profit education companies, Corinthian Colleges, alleging that the company uses deceptive marketing and loan techniques to enroll students and increase profits. In Massachusetts, Corinthian operates two branches of its Everest Institute. As described in the Boston Globe, the AG's lawsuit filed in state court in Massachusetts accuses the for-profit education giant of luring students with misleading promises of employment and pay into education programs that leave them heavily in debt. In an interview with the newspaper, Coakley said, "The only ones who are doing well in this appear to be the [company's] investors." A Corinthian spokesman told the paper that Coakley was ignoring substantial positive evidence about the student success at the company's two Massachusetts campuses. In a statement, Corinthian said in part, “The Massachusetts Attorney General’s Office disregards substantial, independent evidence that our two schools in Massachusetts have a strong record of offering students a quality education and treating them honestly and fairly.”
Members of Congress are seeking to help former employees of a former for-profit school in southern California that suddenly closed. As reported in the Los Angeles Times, the for-profit Career Colleges of America suddenly closed in January 2014 due to a loss of accreditation and a resulting loss of eligibility for federal financial aid. A letter from two congresswomen from Los Angeles notes that hundreds of employees of the school apparently worked without pay for weeks prior to the closing, and demands that the school's owners remedy the situation.
Sudden closures of for-profit colleges across the United States often cause significant harm to former students and employees. If you have concerns about the closure of a for-profit school that you want to share with an attorney, send us an e-mail at email@example.com.