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The Huffington Post reports that one of the nation's largest for-profit education companies is attempting to rally opposition to federal regulations  proposed by the Obama administration by offering students free pizza slices.  According to the report by the Huff Post's David Halperin, the Art Institute of Fort Lauderdale, one of the schools run by Education Management Corporation (EDMC),  posted on its Facebook page that students should "Stop by the library all week between 12-1 and 5-6 to sign in to SaveStudentChoice and enjoy a free slice of Pizza.  Takes 5 minutes."  SaveStudentChoice is a for-profit school industry-backed  website aimed at opposing the Obama Administration's proposed federal regulations that would, among other requirements, condition a college's continued eligibility for federal student aid on the institution's  ability to meet targets for gainful employment among its graduates.  The for-profit school industry is attempting to inundate the U.S. Department of Education with complaints about the regulations before they are scheduled to take effect in late 2014.  
Offering freebies to students at for-profit schools in exchange for help with lobbying or an address or phone number of someone that a school can recruit for enrollment is a practice that regularly occurs at for-profit schools, where aggressive efforts to sell programs to adults and problems with graduating students finding employment often can arise.  


 
 
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."
 
 
A recent article in the Chronicle of Higher Education reported on a study by the Nexus Research and Policy center that considered the cost to taxpayers if all for-profit schools were put out of business.    The study suggested that California, New York, Ohio and Texas alone would spend $8.4 billion more over five years to accommodate all the displaced students.

While the study may raise interesting public policy questions regarding the role of for-profit colleges in the range of higher education options in the United States, it does not address how devastating the experience at some for-profit colleges can be for some students who are misled about matters such as accreditation and job placement and incur tens of thousands of dollars in debt pursuing what may be their only opportunity for higher education.

 
 
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The Riverside, California Press Enterprise has published a story detailing the pending federal lawsuit against ITT Educational Service, Inc., which operates one of its campuses in the Riverside area.  
The newspaper interviewed a number of students at the local ITT campus who detailed their experiences with ITT and the heavy debt burden they had developed while attending programs at the school.  One such student, Tyler Keaggy, 23, told the Press Enterprise that he feels trapped in a situation where he has to continue taking classes for a degree in project management, in part to defer beginning to have to pay on student loans that total $63,000.
“They [ITT]  kind of go through a process,” Keaggy is quoted as saying, “where they take you to financial aid and they do it on the computer, so you don’t really get to read it all or know where those private loans are coming from. In fact, I still don’t know."
The newspaper also reported:
"According to the lawsuit, ITT trained its recruiters to get people who inquired about its programs to visit the campus in person where they would be more susceptible to a high-pressure sales pitch that could go on for hours."
"When someone asked about the college’s cost, the recruiters were instructed to make statements such as “I cannot tell you what your exact cost will be...it varies student to student.” They were to add that the person would find out about the cost “when you come in for the tour.”
When a reporter visited the lobby of ITT’s campus in Orange last week, there were no brochures available to describe the degree programs or their cost. An employee said the college doesn’t provide brochures to visitors, but that people are told those details when they take a campus tour. She said much of that information was also available on the company’s website.
The government alleges ITT misled prospective students with statistics that exaggerated how much they would earn and their chances of getting a job with a degree."
"Laura Brozek worked as a top recruiter for ITT in Orange County, and at two of its other Southern California campuses until 2011, when she became concerned about management’s tactics. Brozek provided written testimony about her experience to the Senate Committee on Health, Education, Labor and Pensions in 2012."
"In an interview with the Register, she detailed how recruiters had used a technique called “the pain funnel,” which was meant to manipulate potential students’ emotions to get them to enroll.
“I would focus on people’s shortcomings,” Brozek said in the interview. “We played upon the vulnerable.”"



 
 
The government's Consumer Financial Protection Bureau has filed a potentially  precedent-setting suit against ITT Educational Services, Inc., one of the nation's largest for-profit education companies.  

As reported in the Chronicle of Higher Education, 
"The nation’s top consumer watchdog sued ITT Educational Services Inc. on Wednesday, accusing the for-profit college chain of pushing its students into high-cost private loans that it knew were likely to end up in default.The lawsuit, the first filed by the Consumer Financial Protection Bureau against a for-profit college, alleges that ITT offered its students zero-interest loans to cover the cost of their first year, knowing that they were unlikely to repay at the end of the year. When borrowers failed to do so, the company pressured them into taking out private loans to pay off their balance and finance their second year of education.The CFPB is seeking restitution for the victims, a civil fine, and an injunction against the company."

ITT and another large for-profit education company, Corinthian Colleges, Inc., have been subjects of investigations by the federal agency for more than a year.  The CFPB began  investigating for-profit education companies shortly after the consumer protection agency was created in July 2011.

ITT, which heavily advertises and operates programs across the nation, has been closing campuses during the time when it has been the subject of the federal investigation. In 2013, ITT reportedly suspended enrollment at two campuses and merged five others into existing campuses.

The new lawsuit has been hailed by attorneys who represent students harmed by predatory practices at colleges and trade schools.  Deanne Loonin, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, told the Chronicle that the lawsuit was  "a signal to the for-profit school industry that business as usual will no longer be tolerated." 

A copy of the lawsuit can be found here.
 
 
A substantial jury verdict against a for-profit school in Minnesota has been upheld by a judge.  As reported in the Huffington Post, a Minnesota judge not only refused to set aside a jury verdict of $395,000 against Globe University, but also awarded $500,000 in attorney's fees to be paid by the school.  

The lawsuit was filed against the for-profit school by a former dean, Heidi Weber, who claimed she had been fired for complaining to the school about use of false job placement statistics and other misconduct.

The Huffington Post reported:
"Weber's suit claimed that Globe had violated a state whistleblower law when it fired her from her job as dean of the school's medical assistant program. The Washington County, MN, jury concluded that Weber was indeed fired in 2011 for raising with management that Globe was providing false information to students about placement rates, starting salaries, and the school's accreditation; failing to provide adequate training for students; and improperly paying commissions to school recruiters. The jury awarded Weber $205,000 for lost wages and $190,000 for emotional distress.
"Globe runs 11 campuses in Minnesota, Wisconsin, and South Dakota and has more than 10,000 students. From 2011 to 2012, the company obtained more than $170 million from federal student aid. More than half of Globe's students drop out without graduating; on some campuses, three-quarters drop out."


Questionable representations about job placement are a recurring problem at for-profit colleges and trade schools.  If you are an employee or student at a for-profit school with concerns about representations made to students at the school that you wish to discuss with one of the attorneys operating this College Watchdogs site, call us at 877-540-8333, or complete this form.