For-Profit Colleges -- Are Our Students (And Taxpayers) Being Served or Ripped Off?
A Corinthian School
The Financial Stakes Have Never Been Higher
For-profit schools in the post secondary sector of higher education offer students the opportunity to learn a trade in a hands-on vocational style of education. While providing a valuable service for students, proprietary schools in the United States are not uniformly regulated, leaving many students with major debt and no education to pay for it.
These schools are also known as technical schools, technical colleges, business colleges, career colleges and more. Many try to hide the fact that they are for-profit by shielding who owns them, buying "brands" in communities (i.e. a school name that has been around for a long time, some for over 100 years).
At a time when the financial stakes for American taxpayers are at their highest, these colleges are proliferating all over the country. In Ohio alone, there are currently 291 schools registered with the Ohio State Board of Career Colleges, up from 279 in 2007. Due to a new tax credit of up to $2,500 being offered to students starting in the tax year 2009, as well as new Pell Grant awards of up to $5,550 for the 2010 school year, the opportunity for profit at these for-profit schools has never been better. The students kick in the rest of the tuition that can be upwards of $25,000 per year at some schools, and most of the time, this additional money comes from federal student loans. It is no wonder that many of these schools are moving from private ownership to private equity groups.
Unfortunately, for the students, the federal Department of Education -- as well as the individual states’ regulating boards -- have allowed these schools to proliferate unchecked. A Google search of lawsuits tell the story of many students who enrolled in these type of schools only to be shocked when they did not get what they were promised. These sad stories run the gamut of lack of accreditation of individual programs to non-disclosure of lack of credit transferability due to specialized training. In my own daughter’s case with a Corinthian school in Florida -- the program was 30 hours shy of hours required to be licensed in another state (requiring a two year repeat of the same program). Currently in the news is a school in Michigan who was sued because they lack the proper authority to award promised Associate’s degrees to students. According to the story, this has been going on there since 2000. That would be funny if it wasn't so darn pitiful and made so many students victims.
An Example of What Is Wrong With the System
A fine example of the lack of regulation can be found by viewing the Ohio Board of Career Colleges 2008 annual report. That report reads more like a glowing brochure for the for-profit colleges than a required report from a governing board whose job it is to protect the student through regulation and oversight:
This Annual Report is testimony to the positive impact of Ohio’s career colleges and schools. The Board is proud of its role in the regulation of this important post-secondary sector. It feels strongly that, with their continued cooperation, Ohioans can remain assured that their investment in a career college or school is one on which they can depend.
It is ludicrous to imagine that out of 291 for-profit schools and over 70,000 students that there were only 58 complaints in the year 2008. There weren't even details to be sketchy about, other than the handy chart pictured below. For all we know, some of these complaints might even be multiple complaints from the same students. While the board seems to think that this means that there are no real complaints, the sad fact is that many students are afraid to complain. The report actually states that:
The number of total complaints received in FY 2008 is consistent with previous years and the complaints, for the most part, represented isolated problems between individual students and schools. Most complaints are normally resolved by achieving voluntary compliance from the schools. The nature of the student complaints, which were received in FY 2008, can be broken down into the following general headings:
NUMBER OF COMPLAINTS
Poor Quality of Education
Failure to Make Proper Refund
Unfair Administrative Policies
Financial Aid Problems
Involuntary Dismissal Issues
A Few More Complaints for the Board
During my own investigation of practices at Miami-Jacobs Career Colleges, I have been in contact with students from several different branch locations. While I have encouraged these students to complain to the Ohio Board of Career Colleges, they are all afraid of repercussions.
Here are some excerpts from actual emails:
“There are several students who are interested in your efforts, but are unable to act because they are also current students.”
“Although many are frustrated, most of the students left are so close to grad that they either do not want to deal with this, or just want to "push through" and get out before more changes occur.”
“What's worse is that they are not training me for my job. The (program) instructors are helping us and doing everything they can for us but it's gotten to the point to where I'm being scammed and ripped off.”
“Maybe you can understand that this is unethical because everyone else thinks they're doing me a favor letting me buy a degree from them.”
“I am a student at miami jacobs as i type, and am supposed to graduate in August. I have had so many problems with this school it is unbelievable. with teachers NOT qualified to teach our classes, clinical hours that are NOT being given to us, the PRICE of 22,000 dollars for this program. I am fed up and want this school to be repremended (sp) for the actions they are doing..or better yet not doing.”
“We were also misinformed of class schedules and times, being told our schedules would stay the same, and in fact, they were changed drastically.”
“Initially when the school changed hands, students weren't even informed, supposedly neither was the staff. We came back to school from a week-long break and there was a sign "Miami Jacobs" on the door! TWO WEEKS LATER - we were called to a meeting during our class time and informed by some poor scapegoat ( who has since been fired) that the school is now Miami Jacobs and that things would only change for the better. Since then, the place has a revolving door - like I said, admission and staff changes so much, students don't even know who to contact for concerns/questions. Not that anything gets answered anyway!”
“We have a clinical site in (another location) that we are currently at, which we had our first day … mind you I have to drive an hour to get there, arrive at 7:45 and NO INSTRUCTOR shows up… told us to go ahead and go home...So we had it again today.. Drove there, have to be there at 7, waited til 7:30..again no instructor shows up.”
“I am just so fed up with this school, the teachers and the price of all things. I graduate in august and I am nowhere confident that I would pass my boards.”
I even found a complaint at Google Maps for the Columbus location at 150 E Gay St located one block west of the offices of the Ohio Board of Career Colleges:
"...Instructor's and students alike are treated like they are 2 years old. It's very, very discouraging to the students and I know for a fact than many of the Columbus campus site students are looking elsewhere to finish out their studies. What a shame. Students that enjoyed going there are now so discouraged they are contemplating either transferring or dropping out until they can get into another school...I, for one, will not encourage others I know looking to obtain a higher education to attend Miami-Jacobs."
Some Suggestions for the Ohio Board of Career Colleges
While these excerpts show that most complaints go unreported, there are many ways to fix the system. First of all, according to complaint rules, there is only a six month window to address complaints with the board. Six months! That is not enough time for these students to issue complaints. Some of the above comments show that many students might be too intimidated to make the complaints while attending school. Is that why these schools get away with this stuff year after year?
I propose that there are enough dollars flowing into these schools that they could pay for investigators to come in on an annual basis to review the schools, interview students (who can speak without repercussions) and take the proper steps to ensure that the schools are operating up to par. These schools already pay the accreditation agencies to do just that, but that system is not working either -- and a topic for a whole other article.
In addition, all state regulating boards should be required to list summaries of pending and closed lawsuits (and the outcomes) on their websites. In a step further, if that school is affiliated with other schools out of state through an educational division such as Delta Career Education Systems or Corinthinan Colleges, those complaints and lawsuits should be listed as well. A student, in researching a school, should not have to use Google search and countless hours to find out the information that the state regulation boards should be providing to protect the student.
Ohio students may get a PDF file copy of the grievance form here.
Department of Education, Washington D.C.
Some Questions For the Department of Education
What kind of job is the federal Department of Education doing in policing these run away for-profit schools? Shouldn’t that federal agency be more vigilant in protecting the students that they are supposed to serve?
I propose that the Department of Education at their ed.gov website offer this same information in a convenient location to the student. This can be gleaned from the state boards who can very well report this information as it occurs to the Department. What is so difficult about this process and why isn’t it being done already? With the instaneous information processes we have today, there is no excuse.
Why is the Department of Education being so cavalier with our limited education dollars? When a school does not deliver the promised education to a student, not only is the student being defrauded, but so is the Department of Education and the very taxpayers who are providing those dollars. Why aren’t these schools being -- at the very least -- fined for this fraud? Most citizens who defraud the government end up with much, much worse.
For further proof of this insanity:
According to the Detroit Free Press website, on July 22, 2009, the Academy of Court Reporting, Clawson branch, agreed to pay out $32,000,000 to about 3,275 current and former students who were promised Associate's Degrees at the Michigan campus. Out of that amount, $7.8 million is in the form of tuition reimbursements.
The settlement also gives approximately 500 students who graduated from the program the ability to transfer those credits to Miller-Motte College in North Carolina toward a bachelor’s degree. The state of Michigan does not now and has never recognized the Academy of Court Reporting, a proprietary school, as a school who can issue Associate’s Degrees in that state. Even so, all the students were able to get federal tax dollars to spend at the school on tuition. How does something like this fly under the radar of the Department of Education for so long? Even more importantly, how are these schools allowed to still be in business and still raking in government dollars?
The Academy of Court Reporting (ACR) was purchased in August 2006 by Delta Career Education Systems, a subsidiary of Gryphon Investors, a $700 million private equity group. In the state of Ohio, while the Academy of Court Reporting is still operating under that name in Cleveland, the Akron, Cincinnati and Columbus locations are now operating under the Miami-Jacobs Career College brand. The Clawson, Michigan, and Pittsburgh, Pennsylvania locations are currently still operating under the name of ACR.
The original Miami-Jacobs Career College, known until recently as the Miami-Jacobs Business College since 1904, is located in downtown Dayton, Ohio. For just under 100 years, that school was a family owned business owned by the Campbells and Harbottles of Dayton, Ohio.
It was sold in 2004 to Huron Capital Partners, a private equity group, for an undisclosed sum for their Delta Career Education Systems division. That division was subsequently sold to Gryphon Investors in 2006 for 11.1 times the amount of its original investment, according to press releases from Huron at the time of the sale. Crain’s Detroit Business, in an article published on May 22, 2006 by Tom Henderson reported that amount to be $115 million.
That mega price tag highlights the profitability of these proprietary schools that often times is at the expense of the student. The Academy of Court Reporting (ACR), brought into the Delta fold by Gryphon in August 2006, added up to a total of 30 schools and 12,000 students under the Delta umbrella. According to the Gryphon Investors website, Delta operates “under strong regional brand names, some with over 100+ years of history.”
Defrauding the Government
As the Michigan lawsuit claims, many of the students at these schools receive Title IV funds, also known as federal student aid, in the forms of grants and loans. By accepting federal dollars in a program where the students are not getting what they were promised (in this case, an Associate's Degree) the Academy of Court Reporting has defrauded the federal government. While the lawsuit has been settled for these particular students, I have seen no reports of sanctions for ACR or Delta Career Education Systems. They are being allowed to operate unchecked, raking in millions of federal tax dollars in the form of student loans and grants.
In many states, students who attend these for-profit schools are also eligible for state grants, including in the state of Ohio. Quite often, the majority of the students at some of these schools are underprivileged students. The particular breakdown of the student body for both the Academy of Court Reporting and Miami-Jacobs Career College branch locations can be obtained through the College Navigator page of the Department of Education website by clicking on the names of each herein.
And Another and Another...
Please Take A Moment to Answer
Do you know of someone who has had problems at a for-profit school?See results without voting
What's Wrong With This Picture?
In addition, as the mother of a student at that location who is enrolled in the Massage Therapy program, I also am unhappy with the “clinicals” in place for that program. Unlike other programs at the school in which the students go out to work in other settings, other than a few two-hour charity events doing chair massages, the students of the Massage Therapy program are required to perform all their “clinicals” at Serenity Spa. Serenity Spa is the for profit spa located within the school in which the students provide free labor to paying customers. To my knowledge, it is the only program at that location where the students are required to work for free to obtain their degrees. Tuition for that program is the same as for the other programs.
Sallie Mae Reston, VA.
That is not the only problem we have incurred with Miami-Jacobs Career College in Dayton, Ohio. During the enrollment process, due to false information from a question that I personally directed to a financial aid officer, my daughter became ineligible to receive federal financial aid for a period of time. When my daughter’s previous school loans showed a default and a subsequent sale back to the guarantor over four months and one new Sallie Mae federal loan disbursement later, the director of the department and a financial aid officer sat doodling while my very confused daughter was left to make phone calls on her own behalf.
While I eventually was able to straighten out their mess, with the kind assistance of Albert Lord, the CEO of Sallie Mae, who personally got involved, the school dropped the ball with us, not taking any blame for the situation. In fact, the original officer, who denied giving us the information was “at another location” and we were never given any access to her. During this situation, the financial aid director showed a shocking lack of knowledge about the financial aid process, the definitive go-to book called The Common Manual (put out by the nation’s student loan guarantors) and what the Master Promissory Note, the contract that every student who gets a federal loan must sign, contained. I decided that the only way to help my daughter was to educated myself, which I promptly did over a month’s period, learning everything I could about the school and the financial aid process.
I was promptly removed from being able to deal with the school situation, even though I was involved by having had asked the original question. After two meetings at school, where we both were basically accused of lying, and in which I demanded that they clean up their mess, I was sent a letter saying that I had “violated the student code of conduct” and asked not to return to the premises. They would only deal with my daughter, an independent student. Their only way of dealing with her was to give her a time limit to clear up the problem or be removed permanently from the school. Of course, this also entailed being required to pay back the new loans and grants that she had received in the four months that she was attending school, as well as giving up any future education due to the lack of eligibility for future loans and grants. Fortunately, Mr. Lord stepped in at the eleventh hour and my daughter’s future education was secured.
Is Anyone Listening?
These are all real problems that young and inexperienced students face daily at for-profit schools across the nation. While these students are old enough to sign away their lives to staggering debt in the form of students loans, they do not understand the differences between public colleges and universities and for-profit schools that often masquerade as old and respected institutions. This situation has got to change. Are there any legislators out there listening?
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