5 Feb 2013
University of Phoenix and for-profits are Thugs
Proprietary School Research
Power Analysis of Apollo Group (University of Phoenix)
1. Accrediting Agencies
a. 60 accrediting agencies
b. Under scrutiny (Harkin Commission report)
c. Similar to Moody’s and bond rating agencies before the economic collapse?
d. Higher Learning Council (“HLC”) regionally accredits University of Phoenix. Information on them difficult to find.
e. Nationally accredited by Higher Learning Commission. Higher Learning Commission admonished by Harkin Commission.
f. BarmakNassirian (American Association of Collegiate Registrars and Admissions Officers) described accreditation system as a ‘"racket" filled with self-dealing and too-low standards…’
2. Student profile and default rates
a. Fraud in default rate reporting
b. Student protests in Chile
c. Fraud in recruiting process (GAO, 2010)
d. Targeting veterans
e. Targeting poor people and people of color
3. Government (90% of funds come from federal government)
From 2009 to 2011, Phoenix received $196 million in VA benefits
b. Pell Grants
c. Direct Student Loans
d. Any other federal programs?
Ties to Democratic Party in CA
Eliminated funding in CA
State legislation in favor of Apollo
f. Harkin Commission
g. Department of Education
a. Presidents of the University of Phoenix sits on the Education Department advisory panel
h. Government Accountability Office
i. Campaign Contributions
d. Layoff.com (behind the scenes, racism, sexism)
a. Stock prices
b. Stockholder lawsuits
Hagens-Berman lawsuit alleging fraud/failure to report problems with accreditation
Lawsuit against Sperling retirement package
6. Corporate Board and Executive Pay
a. Elder Sperling
Retires with $5 million bonus as stock price tumbles
b. Sperling, Jr.
7. Social Buzz
Harkin Questions Accreditation and Oversight of For-Profit Colleges (2011)
GAO Undercover Fraud of For-Profit Schools
Sperling retires with $5 million bonus.
Background on Apollo
Apollo tied in with Democratic party in CA
Apollo Stakeholders seeking investigation after threats to University of Phoenix accreditation (2013)
University of Phoenix to Shutter 115 Locations (10-18-2012)
California Cuts UofP from Funding
“From 2009 to 2011, the VA paid $196 million to the University of Phoenix, $175 million to ITT Tech, $128 million to DeVry University, about $50 million each to Kaplan and The Art Institutes, and $28 million to Westwood College.”
Apollo Group target of students in Chile
College Navigator (vital information including costs, retention rate, graduation rates, and specialized accreditation)
Chronicle of Higher Education and For-Profit Schools
“Criticism of Accreditors
While Senator Harkin's report identifies regulatory problems at the federal and state level, it takes special aim at the regional and national accreditors that have come under harsh scrutiny during several committee hearings.
The flaws attributed to accreditation in the report largely echo the committee's previous criticism of the process, including that accrediting agencies are guided by industry insiders who have an interest in preserving their peers, that accreditors do not have the capacity to adequately evaluate the largest for-profit institutions, and that their policies have not kept pace with the deceptive tactics that some for-profit colleges are accused of using to maximize profits.
"The self-reporting and peer-review nature of the accreditation process exposes it to manipulation by companies that are more concerned with their bottom line than with academic quality and improvement," the report says.
Judith S. Eaton, president of the Council for Higher Education Accreditation, which represents some 3,000 degree-granting institutions and recognizes 60 institutional and programmatic accreditors, said accreditors and colleges were well aware of the criticisms. "We have been discussing many of the issues raised in the report for the past few years," she said in a written statement. "They are important to our future, to students and to society."
Representatives of one accrediting organization highlighted in the report, however, took exception to it. Albert C. Gray, executive director of the Accrediting Council for Independent Colleges and Schools, said some of the characterizations in the report "seem to show a fundamental lack of understanding of accreditation process and standards."
The report accuses the Accrediting Council of having standards that are the "least stringent" among accreditors of degree-granting institutions.
Mr. Gray said the report doesn't back up that assertion with evidence. He also said that comparisons among accreditors would be difficult because the council is the only national accreditor with a majority of members that grant degrees. Most national accreditors assess colleges and programs that don't grant degrees.
Mr. Gray's organization, which accredits more than 850 career-oriented colleges, has been in the spotlight recently, since the Career Education Corporation reported problems with the claimed job-placement rates at 49 of its health and art-and-design colleges. The Accrediting Council accredits the colleges.
To deal with that concern, the council has started a pilot program that involves hiring two "well known" auditing firms to more thoroughly verify the 2011 job-placement reports of 10 member colleges. The findings will be used to examine how the council evaluates those figures, Mr. Gray said.”
President of University of Phoenix sits on Department of Education Advisory panel
BarmakNassirian of the American Association of Collegiate Registrars and Admissions Officers described the accreditation system as a "racket" filled with self-dealing and too-low standards -- most of those who joined the day's parade of criticism urged the Education Department panel to proceed cautiously.
Read more: http://www.insidehighered.com/news/2011/02/04/education_department_panel_hears_ideas_about_improving_higher_education_accreditation#ixzz2Jwh7xQsF
Inside Higher Ed
Movies and Documentaries
Frontline Blog about Lawsuits:
Oregon (lawsuit) about for-profit schools (retirement funds stock dropped)
NJ and PA Lawsuits
Georgetown University Center for Education and the Workforce
WHYY program on for-profit schools
SEIU (“Good for Wall Street, Bad for Students”)
Look at the John Bear books
Look at class action lawsuits against for profits (e.g. NJ and PA against Apollo Group, $78 million)
2012 Harkin Report on For Profit Schools
2010 GAO Report (GAO-10-948T)
FOR-PROFIT COLLEGES: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices
Mother Jones (Explosive Growth in For-Profit Schools—August 2012)
Alyson Schwartz (D-PA) “Know Before You Owe” Act
Lobbies: The Association of Private Sector Colleges and Universities, Career College Association, Apollo Group Inc. Political Organization for Legislative Leadership.
Payouts to Politicians (including Mitt Romney)
2. Legacies (alumni)
3. Credit transfers
4. Graduation rates
5. Costs (compare vs Edison, Empire State, Charter Oak, Depaul)
6. Debts and defaults
7. Getting work after graduation
From the HELP Senate Report:
“For example, Apollo, parent company of the University of Phoenix, paid $78 million to settle a 2002 lawsuit claiming that it illegally paid its recruiters based on the number of students each recruiter enrolled.109 In 2005, following a "60 Minutes" report on CEC's recruiting practices, the company's schools were investigated by State agencies in New Jersey and Pennsylvania, the U.S. Department of Justice, the U.S. Department of Education, and the U.S. Securities and Exchange Commission.110 Altaowned Westwood recently settled with the Colorado attorney general for allegedly misleading students and falsely advertising job placement rates, salary, transfer of credits and other important information.111 Many other schools, including Corinthian Colleges, Inc. and ITT, have faced shareholder and whistleblower lawsuits stemming from their recruiting practices.112 The companies, as well as their lobbyists and trade associations, blame these practices on a few "bad apples" among an otherwise well-trained and ethical enrollment staff. The investigation, however, found that the tactics associated with recruiting students to enroll in for-profit colleges are widespread. Internal company documents, undercover recordings by the Government Accountability Office, HELP Committee staff interviews with employees and students, and testimony and statements from former recruiters all demonstrate that recruiters at many schools are trained to aggressively pursue and enroll as many students as possible, often with little regard for ethical standards or the best interests of the prospective students. At many schools, at least during the period examined, misleading students to secure enrollment contracts appeared to be a common practice rather than an exception. Faced with evidence of recruiting abuses, many companies operating for-profit colleges point to their official policies setting out high ethical standards for their recruiters. Any violations of these
Carly O'Reilly and Daniel Golden, "Apollo Settles University of Phoenix Recruiting Suit (Update 3)," Bloomberg, December 14, 2009, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a7cFhPKPB1mA (accessed May 19, 2012). For a description of complaint against University of Phoenix see Appellant's Opening Brief, United States ex rel. Hendow v. University of Phoenix, 461 F.3d 1166 (2006) (No. 04-16247). For personal accounts from former University of Phoenix counselors that confirm allegations made in the claim, see: Julie Albertson Beh, Exhibit F to Appellant's Opening Brief, United States ex rel. Hendow v. University of Phoenix, 461 F.3d 1166 (2006) (No. 04-16247). Both documents available at http://www.citronresearch.com/wp-content/uploads /2009/03/ nice_case_summary.pdf (accessed May 3, 2012). 110 Eric Wills, "2 More States Open Investigations Into Colleges Owned by Career Education Corp," The Chronicle of Higher Education, August 3, 2005, http://chronicle.com/article/2-More-States-Open/120885/ (accessed May 3, 2012); Rebecca Leung, "For Profit College: Costly Lesson," CBS News, February 11, 2009, http://www.cbsnews.com/2100-18560_162-772913.html?pageNum=2&tag=cont entMain;contentBody (accessed May 3, 2012); Stephen Burd, "Promises and Profits," The Chronicle of Higher Education, January 13, 2006, http://chronicle.com/article/PromisesProfits/12779/ (accessed May 3, 2012). The SEC took no action against the company, but the U.S. Department of Education prohibited CEC from expanding until it had resolved issues with financial statements and program reviews connected with Collins College and Brooks College. Career Education Corporation ("CEC") is a publicly traded for-profit higher education company that enrolled 118,205 students as of fall 2010 and is based in Schaumburg, IL. 111 Alta Colleges, Inc. ("Alta") is a for-profit higher education company that enrolled 19,190 students as of fall 2010 and is based in Denver, CO. Attorney General, Colorado Department of Law, "Attorney General Announces $4.5 Million Settlement with Westwood College to Address Deceptive Business Practices," March 14, 2012, http://www.coloradoattorneygeneral.gov/press/news/2012/03/14/ attorney_general_announces_45_million_settlement_westwood_college_address_dece (accessed March 14, 2012). 112 See, for example, Stuart Pfeifer, "Whistle-blower lawsuit against Corinthian Colleges restored," Los Angeles Times, August 20, 2011, http://articles.latimes.com/2011/aug/20/business/la-fi-corinthian-20110820 (accessed May 19, 2012); Goldie Blumenstyk, "ITT Wins a Round in Ex-Recruiters' Suit," The Chronicle of Higher Education, November 5, 2004, http://chronicle.com/article/ITT-Wins-aRound-in/26180 (accessed May 19, 2012).”
The EDMC has had its own in-house lobbying person for several years. The Chairman of the Board of Directors is John R. McKernan Jr., who previously was the company's CEO. The former Congressman and governor from the state of Maine is married to Sen. Olympia Snowe.
Complaint/Lawsuit against EDMC (False Claims Act)
According to Senator Snowe's most recent financial disclosure form, she and her husband have investments worth between $2 million and $10 million in EDMC. EDMC is now embroiled in a lawsuit in which the federal government, 11 states and the District of Columbia are seeking to recover a portion of the $11 billion in federal student aid that the education firm has received since July 2003.
This suit was originally filed under the qui tam Federal False Claims statute by whistleblowers in the company. The lawsuit alleges that the company violated a federal law that prohibits schools from paying admissions officers based on the number of students they recruit and enroll. Again, we see the pernicious business model of using boiler room marketing tactics to obtain more and more federal money. The education appears to be just a minor part of this model, the hook that makes the cash flow.
The Justice Department intervened on August 8, 2012. In its complaint, the Justice Department alleged that Education Management Corp. submitted "knowingly false, misrepresented, and/or improper certifications" to the Department of Education, stating that it did not offer enrollment incentives to its admissions officers. Without those certifications, students enrolling at the company's schools would not be eligible for federal financial aid.
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