The main trade association of for-profit colleges, APSCU, seems to exist for the purpose of protecting the worst, most abusive, most predatory conduct by its member companies. Why else would the association, once again last week, attack the U.S. Department of Education for seeking to implement a law that simply requires career colleges that receive federal aid to actually train students to earn a living? Why else would it send its CEO to offer wholly incredible comments before a Senate committee? And what was General Wesley Clark doing speaking at APSCU’s annual convention?

APSCU and members of the for-profit college industry, which receives over $30 billion per year from taxpayer funds, have spent tens of millions of dollars to fight — with the Obama administration, in Congress, in the courts, and in the media — against the Administration’s “gainful employment” rule.  APSCU successfully pressed the Administration to water down the rule so that it only penalizes the most egregious conduct; penalties are incurred only if, year after year, two-thirds of a school’s graduates and dropouts are unable to pay back their student loans. But that dilution wasn’t enough for this remorseless industry, because plenty of its big players still flunked even this minimal test. So APSCU went to court and convinced a federal judge to nitpick the rule out of commission.

The Department of Education responded by holding a series of hearings around the country and also seeking written comments about what reforms to pursue next. Many former students and staff replied with harrowing accounts of for-profit college abuses — colleges lying to students to dupe and pressure them into signing up, lying to government auditors about recruiting practices and job placement, offering low-quality programs that left many students deep in debt with no improvement in career prospects.

At the conclusion of the hearings, the Department did what a coalition of student, veterans, civil rights, consumer, and other groups urged it to do — it announced it would promptly start a collaborative public process (called negotiated rulemaking) to create a revised gainful employment rule. (Disclosure: I participated in the effort to convince the Department to act.)

APSCU’s response to the Department’s decision was to engage in more whining. APSCU CEO Steve Gunderson declared his group “extremely disappointed” and expressed “fears of a repeated, faulty and confrontational process.” Gunderson threatened that the Education Department “must not repeat the biased and tainted regulatory process” of the last rulemaking.

In his own statement before the Department late last month, Gunderson had urged that it drop the gainful employment rule and let Congress take care of the matter. He said that knowing full well that his industry’s campaign contributions on Capitol Hill would ensure a stalemate that would block any reforms. And at APSCU’s annual convention in Orlando earlier this month, there was a panel addressing potential Department hearings whose title was just a mocking groan: “Negotiated Rulemaking – Here We Go Again.”

As I described a few months ago, APSCU had boasted that former Joint Chiefs of Staff chairman Mike Mullen would lend credibility to their industry — which has been attacked for fleecing U.S. veterans — by speaking at the convention. I urged Mullen to speak frankly about for-profit college abuses, or else cancel. For reasons unknown, Mullen ended up not appearing, but APSCU found a willing, presumably paid, replacement: General Wesley Clark. I wonder if General Clark was aware of the widespread abuses of our troops and vets by people he was addressing.

The day after denouncing the Department of Education for trying again to protect students, Gunderson was on Capitol Hill to testify before a Senate committee about higher education programs for service members. (WATCH here.) Before speaking, Gunderson was forced to listen while Christopher Neiweem, an Iraq War veteran, discussed his experiences recruiting military students to DeVry University. Neiweem described “a business culture that emphasized hasty enrollment over student needs.” According to Neiween, DeVry recruiters called Defense Department Tuition Assistance dollars “the military gravy train,” recruiters were told to present themselves as “military advisers,” and managers pushed recruiters to get military “asses in classes.”

Summarizing a presentation by Corinthian Colleges, which has one of the worst records of serving students of any for-profit college, analyst Trace Urdan wrote that “essentially all of Corinthian’s borrowers can be characterized as sub-prime.” Urdan’s report finds that Corinthian “remains viable and potentially appealing in the long term” for investors, and blames federal rules for the company’s struggles.

After I reported Urdan’s statement on Twitter, we engaged in a discussion (see below) in which Urdan appeared to blame Corinthian students for ending up with overwhelming debt.

Here are the facts about Corinthian:

• Corinthian is under investigation by the federal Consumer Financial Protection Bureau and at least six state Attorneys General: California, Florida, Illinois, Massachusetts, New York, and Oregon.

• California’s Attorney General found that Corinthian falsified students’ employment records to inflate the company’s job placement rate for graduates.  In 2008, the company paid $6.6 million to settle the investigation out-of-court.  An investigation by WFAA-TV in Dallas found that Corinthian falsified employment records of Texas students.

• 66.5 percent of Corinthian associate degree students drop out, as do 59.2 percent of its bachelor’s degree students.

• An associate degree in business at Corinthian’s Everest College in Florida costs$46,792, while the same program at Miami Dade Community College costs $6,453.  A bachelor of science in business at Everest in Florida costs $81,680; the same degree from the University of Florida costs $24,458.

• Three-quarters of students who attended Corinthian-owned schools were unable to pay down any principal on their student debt in 2009, according to data from the Department of Education.  Thirty-six percent of Corinthian students default on their loans within three years – the highest rate of all publicly traded for-profit education companies.  Worse, Corinthian spent $10 million in 2010 to “manage” student defaults– repeatedly telephoning students to convince them to enter interest-bearing loan forbearance or deferment — in order to be able to report lower default rates to the Department of Education.

• Last year, the Education Department released information about which career training programs and for-profit colleges are passing — and which are flunking — its new “gainful employment” rule.  The Obama Administration watered down this regulation last year after a massive lobbying campaign by the for-profit college industry, and the rule imposes only the most minimal standards, measuring how many students are paying back their loans and how much debt they have compared to their inc0me. Corinthian’s Everest College and Universities performed the absolute worst of all schools — 43 out of 143 programs at those schools failed each of the three gainful employment tests.

• In 2009, Corinthian received at least 89.4 percent of its revenue from federal taxpayer dollars, with Pell grants, student loans, G.I. Bill funding and other aid  totaling $1.4 billion.

• Because federal aid still doesn’t cover all the cost of attending Corinthian, in 2009 and 2010 the company made private loans totaling $240 million to its students at an average interest rate of 13 to 15 percent, with some students paying as much as 18 percent.  According to its own internal analysis, Corinthian estimated that 55 percent of students with these loans will default.

• Corinthian spent between $5 and $10 million on an advertising campaign to block federal accountability standards.

Urdan’s conclusion, however, when I cited Corinthian’s abysmal record, was this: “School offers quality instruction and opportunity. Students make of it what they will.”

Blaming the students that way is remarkable, given the evidence that Corinthian has engaged in fraudulent conduct. It’s like saying about a restaurant that serves poison-laced food, “Diners make of it what they will.”  If the majority of students drop out of Corinthian schools, and the majority of students can’t pay back their loans, the school is clearly doing things wrong — charging too much, offering poor quality programs, failing to deliver on promises to train people for productive careers.

But Urdan keeps working to blame others besides the for-profit schools. At a Department of Education hearing last week in San Francisco, Urdan criticized the Department for rulemaking processes that he said harmed investors in for-profit colleges, according to people who attended.

This week an LA Times columnist covered a story that I wrote about in April — the dismaying decisions by former Defense Secretary Leon Panetta and National Urban League President Marc Morial to join the Corinthian Colleges board of directors. The Times article drew a wholly unresponsive PR response from Corinthian president Jack Massimino.

Here’s the Twitter exchange:

Trace Urdan‏@Trace_Urdan

@DavidHalperinDC When subprime borrowers default on mortgages, do you blame realtor, lender, or buyer?

 

David Halperin ‏@DavidHalperinDC9m

@Trace_Urdan If realtor or lender was under investigation by 6 state AGs & CFPB & paid $6M re claims it falsified records, I’d start there.

This article also appears on Huffington Post. 

The Romney readiness paper has drawn attention for its likening of the White House staff to a holding company, its plans for corporate-style management trainings, its detailed flowcharts, and its plans to roll back federal regulations. But I don’t know if anyone has asked about the book’s publisher, which according to Amazon is “R2P Inc.”

Have you heard of this publisher? According to the contract that established the Romney transition project, R2P, Inc., (presumably “Romney to President”) is a corporation that was established by Mitt Romney to accept federal money “in connection with his preparation for the assumption of official duties as president.” A good followup item would be to find out who runs and owns this company, likely a 501(c)(4) nonprofit, and who stands to earn royalties from the sale of this book. (The limited number of pages available for preview on Amazon include a warning on every page: Copyrighted Material. The copyright holder, according to the book, is R2P.)

Since taxpayers paid for this work, it should be made available to all on the Internet.  A work of government is not subject to copyright and should be shared for free. This approach — using government as a business opportunity for his friends and donors — was all too typical of Romney’s platform, and it shows how lucky we are that Romney wasn’t elected. Sadly, keeping taxpayer-funded projects (such as medicines funded with federal grants) and provisions of our laws behind expensive paywalls is in fact prevalent in our system today. We need to reform the system. Unless it turns out that all proceeds of the book will be returned to taxpayers, and unless R2P Inc. promptly posts the entire text on the Internet, we should start by not buying this book.

UPDATE 8:15 PM: Soon after publishing, I wrote seeking comment to the email address on the back of the book cover. At 7:40 pm I received an email response from Daniel Kroese, who, according to LinkedIn, is Special Assistant to the Executive Director of the Romney Readiness Project. He wrote:

David, we wish you had contacted us before you posted, as your article is filled with inaccuracies and the the title is not only misleading but flat out untrue. Some key points:

1) Romney isn’t selling anything. Mitt Romney was not involved with the process of producing this report.

2) R2P Inc. is a non profit organization which has never received ANY government funding. To say the transition report is funded by taxpayers is categorically untrue. In fact, since Romney lost the election there was never any transfer of funds from the US government to the Romney transition operation in any capacity. The $6.6 million appropriation was only set to be transferred AFTER a victorious election.

3) Royalties (which will be very minimal) will be donated to charity.

4) The book makes publicly available information that in the passed has stayed within the closely guarded walls of each party. It was felt that the Pre-Election Presidential Transition Act of 2010 (unanimously passed Senate) reinforced the belief that pre-election transition planning is a responsible way to safeguard our national security and promote continuity of government. As the first transition effort to operate under these guidelines it was felt that an appropriate measure of bipartisanship would be to make the lessons learned from this effort publicly available as opposed to only sharing with Republican leadership.

I hope you can amend your article accordingly to reflect these facts.

I responded:

Daniel,

Thanks so much for the prompt response. I have carefully read it, and I do not believe there were any inaccuracies in my piece.

Shortly after posting the article and writing to you, I updated it to clarify — to state explicitly — what I understood to be the case under the statute and the contract — R2P received federal services and facilities (office space, phone service, etc.) from the federal government. Unless R2P did not ultimately accept such services and facilities, then it did receive taxpayer support. Please let me know if, in fact, R2P ended up declining all such services. (Nowhere in my original version did I state that the federal support R2P received was in the form of cash, but my prompt revision was intended to make that explicit.)

I also clarified in my updating of the post, based on reading the statute, that R2P was likely a 501(c)(4).

The contract also states that “Governor Romney established R2P,” indicating to me that he is connected to that entity, which Amazon lists as the publisher of the book. Please do let me know Governor Romney’s past and current role in R2P, so I can make any necessary clarification.

I think it is admirable that the organization wanted to share the report, but I strongly urge you to share it more broadly by posting it on the Internet.

Thanks.

David

Kroese responded:

David the biggest inaccuracy would be the title as there is zero connection between the taxpayers and the funds used to produce this report (which were modest). Yes, the GSA did provide office space and tech support (which we did accept) but this taxpayer support facilitated the transition effort itself NOT the subsequent production of this report. I think this distinction is significant. There simply were no discretionary funds that were ever given to the Romney transition effort. As I said earlier, this would have occurred post election. To link taxpayer funds to the production of this report is simply not true.

And I responded again:

Daniel, Thanks. I very much want to be accurate. GSA provided office space and tech support from the date of the contract through or close to election day, right? I presume the transition documents were developed in that period and not, as you suggest, “subsequent.” I certainly hope it is not the case that the material in the book was prepared from scratch after election day, because what would have been the point of that? If some work to complete the material in the book was done after election day, I’ve got to believe some was done before, in which case it was done by an entity that took advantage of taxpayer-funded services.

By the way, I appreciate that the royalties will go to charity. Can you tell me which charities? But I think it would still be appropriate to share with the taxpayers for free the fruits of a project that they helped fund, rather than selling it.

I will post this whole exchange as an update to the article.

UPDATE 2: Actually we do have a sense of what taxpayers shelled out to support Romney’s pre-election transition project — $8.9 million.

This article also appears on Huffington Post.

Today, I want to share my own comments to the Department of Education. You can read them here. Below I have excerpted a few portions.

In the public hearings the Department has been holding, representatives of for-profit colleges have urged you to postpone rulemaking and allow Congress to address the issues through reauthorization of the Higher Education Act. What they are actually seeking through this approach is to make sure nothing happens that would impede the flow of federal dollars to even the worst actors in their industry.

For-profit colleges receive as much as $33 billion a year in taxpayer money. They use millions of dollars from those federal revenues to hire the most expensive and connected lobbyists, litigators, and public affairs strategists in Washington, and to provide campaign contributions, in an effort to avoid reforms that would hold them accountable for deceptive and abusive practices that harm students and taxpayers alike. During the first Obama term, the industry used these resources to prevent reform measures on Capitol Hill and to enlist Members of Congress to pressure the Administration to forego regulatory changes. No doubt that is what many for-profit colleges would like to do again in the next round.

Numerous government and media investigations have now revealed the truth about this industry, and I believe the political tide has turned to a significant extent. But the for-profits’ riches may continue to force a congressional stalemate on these issues, thus blocking reforms through the HEA or otherwise. In other words, leaving the decisions to Congress may well mean doing nothing. On the other hand, President Obama was re-elected last year six months after making a strong, unambiguous statement at Fort Stewart, Georgia, about the need to crack down on for-profit college abuses, and he defeated an opponent, Mitt Romney, who expressly endorsed and received extensive support from the industry. This Administration has clear authority – statutory authority and moral authority – to implement effective regulations to curb abusive practices by for-profit colleges. You owe it to our citizens to do so promptly.

Among the many untruths uttered by predatory for-profit colleges, two stand out for me.

The first is that their schools “should be congratulated” for enrolling many low-income students that other schools might turn away. I actually heard a top for-profit college lobbyist use that phrase once in a small room meeting. It is a remarkable statement. These enterprises should be congratulated, and I will be the first to do so, if and when they actually train most or all of their students for rewarding, remunerative careers. They should decidedly not be congratulated for what many of the big players in the industry now do for a great number of their students – simply mislead them, enroll them, cash their financial aid and private student loan checks, and then leave them adrift, in weak and often worthless programs.

The second untruth is that today’s for-profit schools represent a free market alternative to traditional higher education. I support the idea of private sector involvement in higher education as a way to spur innovation and efficiency. But today the for-profit college industry’s big players are spurring anything but, and they are getting rich off a revenue stream that is 86 percent federal dollars. Theirs is a government program, not a free market program. And the issue before you is whether to tolerate a federal regulatory status quo that rewards waste, fraud, and abuse, or whether instead to rewrite the rules to reward schools that actually are helping their students and vindicating the federal investment in higher education.

Standing with our soldiers at Fort Stewart, Georgia, a year ago, President Obama signed an executive order aiming to protect U.S. troops, veterans, and their families from predatory abuses by for-profit colleges. The President charged that some for-profit education companies “aren’t interested in helping you…. They are interested in getting the money.” He called their conduct “appalling” and “disgraceful” and told the troops that these schools are “trying to swindle and hoodwink you.” He was absolutely right, and the moral urgency of his remarks demand that his Administration continue the essential, arduous work of protecting our students from predatory colleges and the mountains of student debt they take home as profits. That includes ensuring a strong gainful employment rule, one that implements an essential, common-sense principle:

Federal aid should go only to those career education programs that effectively train students and help them build careers.

LAUER: You said you don’t think there’s been any proof thus far that Sandy was caused by climate change. Several experts I’ve heard from say the destruction, though, from Sandy, was probably more severe because of elements of climate change, including rising sea levels. Are you not willing to say that’s from-

CHRISTIE:  No ….this is their business, they study it, and they say, “probably,” “maybe.” All I said was, I haven’t been shown any definitive proof yet that that’s what caused it. And this is just – listen, this is distraction. I’ve got a place to rebuild here and people want to talk to me about esoteric theories. We’ve got plenty of time to do that later on….

WATCH:

In fact, there is an overwhelming scientific consensus that human activity — the burning of fossil fuels — is rapidly causing climate change, and that climate change leads to extreme weather events. It doesn’t matter whether there is conclusive proof that climate change caused Sandy. What matters is what can we do now to reduce the chances that there will be more frequent and even more destructive Sandys destroying the lives of our children and their children.

Contrary to Christie’s glib assertion that we have “plenty of time” to address climate change “later on,” the task is urgent: The last twelve years all rank in the t0p thirteen warmest years ever recorded, and earlier this month scientists reported that “the level of the most important heat-trapping gas in the atmosphere, carbon dioxide, has passed a long-feared milestone … reaching a concentration not seen on the earth for millions of years.”

Christie himself had previously admitted that climate change was a legitimate problem. Perhaps now he is more concerned about competing for the 2016 GOP presidential nomination and oil and gas campaign contributions against climate-denying competitors like Marco Rubio.

In any case, his record speaks louder than his words; as governor, Christie has repeatedly undermined policies aimed at addressing climate change, withdrawing New Jersey from a Northeast states plan to reduce carbon emissions, shutting the Office of Climate Change and Energy within the state Department of Environmental Protection, weakening New Jersey’s renewable energy regulations, and cutting $210 million from his state’s clean energy fund.

Christie deserves praise for helping New Jerseyans rebuild from the devastation of Sandy. But his leadership can’t stop there: Real leaders must act boldly to address long-term problems, not to sweep them under the rug.

Chris Hayes did a fine piece on Christie and climate change last night. WATCH:

Visit NBCNews.com for breaking news, world news, and news about the economy

This piece also appears on Huffington Post and Grist.

Game over, despite the fact that producing tar sands oil, the kind to be carried by Keystone XL, is one of the dirtiest energy processes of all, harming local communities and contributing heavily to global warming, at a time when scientific evidence shows that global warming is ever more intense.  Game over, despite the fact that recent pipeline leaks of the kind of oil to be carried across our country by Keystone XL have proven extremely harmful and difficult to clean up.

But it’s not just such scientific evidence that might cause us to question the assertions offered in the National Journal article. There’s also the fact that the journalism outlet that published the article, and at least one think tank cited in the article, have received money from the oil and gas industry. The reporter and the people quoted may well have come to their own honest conclusions about Keystone XL. But when money so heavily corrupts politics — when special interests spread their cash not just to politicians but to the advocacy groups and media companies that host and contribute to policy debates — as happens so often these days, it’s hard to sort out which opinions have been reached honestly and independently and which have been effectively bought.

One of the experts cited by National Journal for the proposition that Keystone XL is no big deal, and is a distraction from the broader energy debate, is Jason Grumet, president of the Bipartisan Policy Center, who, according to the article “has advised Obama on energy and climate issues and is close with the administration.” Grumet, an energy specialist who was indeed a key Obama 2008 policy adviser, is quoted as saying, “We are essentially jamming our national energy policy debate through a 30-inch pipe. It’s an unfortunately narrow space….”

The Bipartisan Policy Center (BPC) is a Washington think-tank, which purportedly stands for the principle that Washington needs Democrats and Republicans to come together for sensible solutions to our policy challenges. But in practice the outfit often seems more like a voice for corporate interests in Washington, and nowhere is that more pronounced than in the energy sphere.

Earlier this year, the BPC released a report of its energy policy commission, chaired by former Senators Trent Lott, Republican, and Byron Dorgan, Democrat — bipartisan!  The report found that “climate change is a significant issue” — but then did nothing with that insight. Instead, the report called for accelerating oil drilling offshore and on federal lands, as well as the hazardous practice of underground hydrofracking for natural gas. The report includes no recommendation to cap or tax the greenhouse gas emissions that contribute to global warming.

What was not highlighted at the BPC event launching the report was that both Lott and Dorgan are lobbyists for numerous companies in the oil and gas industries.

National Journal covered the BPC’s Lott-Dorgan energy commission, breathlessly noting that the former senators were “working together on a blueprint for energy legislation” and that “their effort could gain traction: Both are held in high regard by their former colleagues, and the BPC is a serious player in the energy debate.” In another piece, the National Journal called the BPC “an influential group that’s helped to shape federal policy on both energy and health care—and that has the ear of the White House and congressional leaders.”

But the National Journal didn’t question whether Lott and Dorgan’s large consulting fees from energy companies might affect their views of policy.

National Journal also did not report in these fawning pieces that a large percentage of the donors to the Bipartisan Policy Center are companies in the oil and gas field, including:

•  ExxonMobil Foundation
• American Gas Association
• Entergy Corporation
• Alliance Energy
• America’s Natural Gas Alliance
• Chevron Corporation
• ConocoPhillips Company
• Energy Future Holdings Corporation
• Exelon Corporation
• PG&E Corporation
• Pioneer Natural Resources
• Schlumberger Limited
• Shell Oil Company
• Southern Company

Corporate donors sometimes do seek explicit quid pro quo arrangements from non-profits they support — policy endorsements in exchange for cash. But they don’t always need to. Some think tanks are simply created as front groups for a given industry, so there’s nothing to corrupt. In other cases, a group might start out with a genuine independent policy mission, but the organizations’s management, acutely aware of the need to raise money to keep the non-profit going, find themselves setting boundaries that avoid criticizing corporate donors or undermining their policy stances.

I don’t know what is going on inside the Bipartisan Policy Center. But they sure take a lot of oil and gas money. And their “bipartisan” conclusions sure sound like oil and gas industry wish lists.

But then, their admirer National Journal is itself a recipient of financial support from such interests. Events on energy policy hosted by National Journal and its parent company, Atlantic Media, have been sponsored by the American Gas Association (AGA), natural gas and pipeline companies CenterPoint Energy and Spectra Energy, and oil company BP.  AGA ads also popped up over and over on the National Journal website as I researched these connections.

Exxon Mobil, Shell, Chevron, and BP are among the many energy interests lobbying Washington on the pipeline issue.  All run Gulf Coast refineries that could be recipients of oil from the Keystone pipeline.

Media companies, like think tanks, need new sources of revenue to stay in business, and these types of compromises are happening every day, at a range of publications and on a range of issues. Atlantic and National Journal also have accepted as energy event sponsors the American Lung Association and alternative energy interests. But the company’s ongoing acceptance of largesse from the oil and gas industries — something that environmental advocates cannot so readily purchase — coupled with their unquestioning awe of the BPC think tank, which seems even more compromised, does raise questions about their coverage.

Last week’s National Journal story did note that Carol Browner, previously Obama’s top White House environmental official, has called proceeding with the pipeline “deeply troubling.” But it quoted two additional Obama advisers in support of the thesis that Keystone XL doesn’t matter much: Former Obama energy policy official Joseph Aldy, now at Harvard’s Kennedy School, and Jason Bordoff, who, as described in the National Journal article, “left the White House this January after advising Obama on energy and climate issues in senior policy positions since April 2009.” Bordoff is quoted as saying, “I don’t know how much building or not building one pipeline is going to affect either how much oil is produced in Canada or in global greenhouse-gas emissions.”

The line taken by all these Obama-linked experts — that one little 1,700-mile pipeline won’t tip the balance on the global environment, and we should instead focus on the big picture — sounds plausible.  But oil and gas interests have and will continue to spend millions on lobbying and round-the-clock TV ads to block progress on the big picture, whether or not the Keystone pipeline is approved. And environmental experts say that no progress on larger issues can justify the environmental harms that will be caused by extracting and burning the oil in the Canadian oil sands and building the Keystone pipeline.

Bordoff is now the director of Columbia University’s new Center on Global Energy Policy, which launched last month with a speech by Obama’s national security adviser, Tom Donilon. While I don’t doubt that Bordoff is speaking his own mind, I’m wondering if his new Center is accepting, or planning to accept, financial support from oil and gas companies.

This article also appears on Huffington Post and Grist.

Panetta served on the Corinthian board before, just prior to joining the Obama Administration as CIA director in 2009. Since then, as the debate over for-profit colleges has heated up, the public has learned a lot about Corinthian. It’s too bad this information didn’t trouble Panetta:

• Corinthian is under investigation by the federal Consumer Financial Protection Bureau and at least six state Attorneys General: California, Florida, Illinois, Massachusetts, New York, and Oregon.

• California’s Attorney General found that Corinthian falsified students’ employment records to inflate the company’s job placement rate for graduates.  In 2008, the company paid $6.6 million to settle the investigation out-of-court.  An investigation by WFAA-TV in Dallas found that Corinthian falsified employment records of Texas students.

• 66.5 percent of Corinthian associate degree students drop out, as do 59.2 percent of its bachelor’s degree students.

• An associate degree in business at Corinthian’s Everest College in Florida costs$46,792, while the same program at Miami Dade Community College costs $6,453.  A bachelor of science in business at Everest in Florida costs $81,680; the same degree from the University of Florida costs $24,458.

• Three-quarters of students who attended Corinthian-owned schools were unable to pay down any principal on their student debt in 2009, according to data from the Department of Education.  Thirty-six percent of Corinthian students default on their loans within three years – the highest rate of all publicly traded for-profit education companies.  Worse, Corinthian spent $10 million in 2010 to “manage” student defaults– repeatedly telephoning students to convince them to enter interest-bearing loan forbearance or deferment — in order to be able to report lower default rates to the Department of Education.

• Last year, the Education Department released information about which career training programs and for-profit colleges are passing — and which are flunking — its new “gainful employment” rule.  The Obama Administration watered down this regulation last year after a massive lobbying campaign by the for-profit college industry, and the rule imposes only the most minimal standards, measuring how many students are paying back their loans and how much debt they have compared to their inc0me. Corinthian’s Everest College and Universities performed the absolute worst of all schools — 43 out of 143 programs at those schools failed each of the three gainful employment tests.

• In 2009, Corinthian received at least 89.4 percent of its revenue from federal taxpayer dollars, with Pell grants, student loans, G.I. Bill funding and other aid  totaling $1.4 billion.

• Because federal aid still doesn’t cover all the cost of attending Corinthian, in 2009 and 2010 the company made private loans totaling $240 million to its students at an average interest rate of 13 to 15 percent, with some students paying as much as 18 percent.  According to its own internal analysis, Corinthian estimated that 55 percent of students with these loans will default.

• Corinthian spent between $5 and $10 million on an advertising campaign to block federal accountability standards.

Last year, Morial’s Urban League accepted $1 million in aid from Corinthian.  When I tried to ask a question of Morial and Corinthian Colleges CEO Jack Massimino on the conference call announcing the gift (paid for mostly with our tax dollars), the moderator announced that there were no more questions, and the call ended early.

The Urban League’s mission is “to provide economic empowerment, educational opportunities and the guarantee of civil rights for the underserved in America.”  Corinthian’s record shows that it accomplishes just the opposite — it takes students’ money and often leaves them deep in debt without giving them real training for a better career.

Fortunately, low-income communities have other strong advocates standing up against the abuses of for-profit colleges.  The NAACP, Leadership Conference on Civil and Human Rights, Hip Hop Caucus, Mexican American Legal Defense and Educational Fund, and the National Council of La Raza are among the groups supporting President Obama’s approach to holding the for-profits accountable. A majority of members of the Congressional Black Caucus voted in 2011 to back this Obama initiative, and Rep. Keith Ellison and others spoke with conviction about the importance of this issue.

Rep. Maxine Waters (D-CA), has written to Donald Graham, the CEO of The Washington Post company, noting that Kaplan, the for-profit education business owned by the Post, had shut down a dental assistant program in Charlotte, NC, after students complained that they had been misled about the credentials they would receive.  Waters wrote to Graham that such incidents illustrate the importance of federal rules to protect students and taxpayers from bad practices in this industry.  She concluded, “I will continue to fight against any and all so called ‘educational programs’ that exploit and mislead those who simply want a good education and a better life.”

Morial, a former mayor of New Orleans, is now formally on the wrong side of this issue.

Panetta’s long and distinguished record of public service cannot excuse his endorsement of Corinthian. In fact, as with Morial, it makes it even worse that Panetta has lent his name to Corinthian. Especially because for-profit colleges have a particularly bad record when it comes to abusing our service members and veterans.

Last year, in remarks at Fort Stewart, Georgia, President Obama warned our military service members that some for-profit colleges “aren’t interested in helping you…. They are interested in getting the money.” He called the schools’ conduct “disgraceful” and told the troops that these schools are “trying to swindle and hoodwink you.”  Holly Petraeus, who directs service member affairs at the Consumer Financial Protection Bureau, has said that predatory for-profit colleges “see service members as nothing more than dollar signs in uniform.” Senator Tom Harkin has issued an extensive report documenting how for-profit colleges use deceptive and coercive recruiting tactics to lure our troops and veterans into costly programs that provide worthless credits or degrees — and huge student loan burdens.

Corinthian is the number seven recipient of GI Bill funding among all colleges in America.

The for-profit college’s trade association, APSCU, has now attempted to deflect all the criticism by having Admiral Mike Mullen, the former chairman of the Joint Chiefs of Staff, serve as keynote speaker for the group’s upcoming convention. APSCU’s website makes plain why they want Mullen to appear on their stage; APSCU boasts that Mullen’s appearance at the convention “will be a truly extraordinary moment for private sector education, bringing increased visibility and respect to the sector.”

Now with Panetta on board, the for-profit college industry has another talking point to claim that it is military friendly. But it’s not. Didn’t they hear the President? Panetta should resign his new position, and instead support veterans’ groups that are working to ensure that our troops, vets, and their families have access to quality, affordable, education opportunities that help them build careers.

So why is Suze Orman — who calls herself  ”undeniably America’s most recognized expert on personal finance” — teaching an online personal finance course at the University of Phoenix, the biggest of these controversial for-profit colleges?

Last week, celebrity guru Orman spoke at a Capitol Hill event and warned students about taking on too much loan debt. But at the same time she announced that she is launching the online University of Phoenix course. As Orman recently explained,  “You interact with this course… You’re going to leave with a will, a revocable living trust and making sure you have the right kind of insurance. When you’re done with it, oh, you will have your act together.” But if you’re taking the course, um, you’re at the University of Phoenix, and as a result you may end up in real financial trouble anyway.

Granted, there are worse institutions than the University of Phoenix, and many of its graduates have indeed gone on the productive careers. But for many students, the school has turned out to be a financial disaster. And Orman’s decision to join the  University of Phoenix faculty and thus give her seal of approval to the institution does a disservice to Americans across the country who count on her for unvarnished and useful financial advice.

A poor educational record

Apollo Group, the owner of University of Phoenix, gets about 89 percent of its revenues from federal financial aid programs. Much of that is in the form of student loans, and because of Phoenix’s high prices, many students must take out additional high-interest rate private loans to cover all the costs. Tuition for an Associate’s degree in Business at the University of Phoenix Online is $24,500. The same degree costs $4,087 at Phoenix College in the Maricopa Community College system in Arizona. A Bachelor’s in Business at the University of Phoenix costs $74,575, while the University of Arizona charges $44,200 for the same degree. So students who attend the University of Phoenix usually end up borrowing, and owing, a lot of money.

They may often enroll precisely because they have bad information. The University of Phoenix, like many for-profit colleges, has used high-pressure, deceptive boiler room tactics to recruit students. A comprehensive investigation by the Senate Health Education Labor and Pensions (HELP) Committee unearthed University of Phoenix recruiting manuals instructing staff to create a false sense of urgency about signing up. One advised, “Do not tell the student we have classes running every week unless you can agree on a start date, or rolling start dates is a selling point.”  Another said to tell prospective students, “it looks like I might be able to squeeze you into” the next start date.

Likely because of deceptive recruiting, high costs, and weak programs, a large percentage of University of Phoenix students never graduate. The Senate investigation found that of the 280,000 students who had enrolled at the University of Phoenix and the other Apollo school, Western International University, in 2008-09, 60.5 percent had dropped out by mid-2010 — higher than the 54 percent overall dropout rate of for-profit colleges.

Schools like University of Phoenix with high dropout rates also have high loan default rates, and Phoenix’s has been rising steadily as the company’s enrollment and revenues have increased. By 2008, more than one in five University of Phoenix students was defaulting within three years of leaving the school — nearly twice the default rate of students at public and non-profit colleges. The company told investors last year that it expected the 2009 default rate to be 26.7 percent.

Federal regulations are designed to cut off financial aid to schools with default rates above 30 percent, and it appears that Apollo and other for-profit education companies have addressed this risk by pressuring broke students to put their loans in “forbearance” status, rather than defaulting; forbearance is a paper solution that does nothing to help the student, but allows the school to keep the federal aid pouring in.

What do the students get for their high tuition payments and big loan debts? The Senate investigation found that Apollo spent $892 per student on instruction in 2009 — “one of the lowest amounts spent on instruction per student of any company analyzed.” By comparison, the University of Arizona spent $11,128 per student on instruction.

Meanwhile, Apollo in 2009 devoted $2,225 per student — 23.7 percent, or $935 million — to marketing and recruiting. Last year when Senators Tom Harkin (D-IA) and Kay Hagan (D-NC) introduced a bill to bar for-profit colleges from spending taxpayer money on marketing, Apollo attacked them for offering “misleading rhetoric.” The Senators had singled out Apollo for employing more than 8,000 recruiters in 2010. Advertising Age recognized Apollo as one of the top 100 spenders on U.S. advertising in 2009  – $377 million, more than Apple.  But instead of thanking Senators Harkin and Hagan for authorizing — and taxpayers for providing — most of the money to pay for these ads, and for sponsorships of everything from New Yorker magazine education panels to Good magazine’s education website to Arizona’s University of Phoenix Stadium, Apollo lashed out.

Apollo also devoted $2,535 per student in 2009 — 27 percent of its revenue, or $1.1 billion — to profit. And that was in addition to the enormous salaries Apollo paid to its top executives. In 2009, Apollo founder and Chairman John Sperling got paid $8.6 million, more than 13 times the salary of the president of the University of Arizona. Co-CEOs Charles Edelstein and Gregory Capelli shared another $3.4 million.

Investigations of misconduct

University of Phoenix also has repeatedly been charged with fraud and other misconduct.

In 2003, two former employees sued Apollo under the federal False Claims Act, alleging that the company had defrauded the U.S. Department of Education by obtaining federal student aid based on false statements of compliance with federal rules that prohibit schools from paying recruiters based on the number of students they recruit. Apollo settled that case in 2009 by paying out $78.5 million. In 2004, the Department of Education brought a separate suit for these violations, resulting in Apollo paying another $9.8 million.

Thirty-two state attorneys general are working together to investigate for-profit colleges, and some of them are pursuing allegations against the University of Phoenix. Florida’s Attorney General has subpoenaed the school as to “misrepresentations regarding financial aid” and “unfair or deceptive practices regarding recruiting, enrollment, placement, etc.” Delaware’s attorney general has subpoenaed Phoenix regarding its business practices. The Massachusetts AG is pursuing whether the schools engaged in deceptive actions with respect to recruit and financial aid.

In 2010, Apollo disclosed that the Securities and Exchange Commission (SEC) had requested information from the company about its insider trading policies relating to stock sales made by John Sperling and his son Peter in 2009. In April 2012, the SEC announced it was investigating the company for insider trading following a February 2o12 announcement of lower than expected earnings.

And this February, the University of Phoenix announced that it expected to be placed on probation by its accreditor, the Higher Learning Commission of the North Central Association of Colleges and Schools. The accreditor charged that the school lacked sufficient autonomy from its corporate owner, Apollo, and it also raised concerns about dropout rates and the school’s overreliance on federal aid. (The normally docile accrediting bodies have come under pressure from government authorities to start taking their duties seriously.)

Instead of atoning for its poor record, the company has been defiant. Apollo founder John Sperling, now 92 years old, is a major donor to Democratic and progressive causes, and he has used that status to personally pressure prominent people in Congress and elsewhere in Washington to undermine Obama Administration actions that would hold for-profit colleges accountable.

Orman and Phoenix

None of this seems to bother Suze Orman. Well before she announced that she was going to teach her finance class at the University Phoenix, in December 2011, Orman wrote an article in USA Today warning families, as she did last week in Washington, of the “skyrocketing costs” of college and urging them not to attend schools they cannot afford. She blamed colleges for failing to explain to students the real costs of attending. But she singled out one school for praise:

Fortunately, a few universities are realizing their duty to step up to the plate by themselves. The University of Phoenix, for example, makes all its students go through a free and mandatory three-week orientation course to make sure they understand the full costs of college before they sign on the dotted line. These efforts are encouraging.

Was Orman already being paid by Apollo at this point, or did she really decide that of all the colleges and universities in America, the one most worthy of being singled out for praise was the University of Phoenix? I don’t know. My efforts to contact Suze Orman to hear her side of the story produced no response.

But here’s a clue. The Phoenix’s three-week orientation workshop mentioned by Orman is required for prospective students who have fewer than 24 college credits to help them determine if they are “ready for the challenges of earning a degree — and if our University is right for you.” The 2013 syllabus for the workshop shows that new students will view four videos featuring none other than Suze Orman! (Titles: “What is Your Learning Path?”;  ”Why Do You Want to Go to School?”; “Invest in Yourself”; and “The Value of a Degree.”) When Orman singled out the Phoenix orientation course for praise in her USA Today article, she forgot to mention that she was, or would soon be, one of the instructors.

Orman certainly seems to be building a strong bond with the school. In January 2012, the University of Phoenix Facebook page posted a link to a new debit card marketed by Orman and asked, “We need your feedback about The Approved Prepaid MasterCard from Suze Orman! Would it be valuable to University of Phoenix students? Let us know what you think.” The school may not have gotten the answer it wanted.  A number of commenters responded that the card would in fact be a bad deal for students, and others have concluded that the Suze Orman Prepaid Mastercard is a bad deal for most people.

So why is Suze Orman giving her stamp of approval to the University of Phoenix? Attending that school may not end up being a good deal for you, but presumably the relationship is a good deal for her.

This article also appears on Huffington Post. 

The owners of America’s big for-profit colleges have developed a big bag of tricks to keep tens of billions of federal dollars flowing their way, regardless of the bad consequences for students and taxpayers.  Every time we think we’ve seen it all, a new brazen tactic emerges. Here’s the latest:

The nation’s second largest for-profit college businesses, troubled Education Management Corp. (EDMC), last year designated a Canadian college that it owns as a satellite campus of one of its U.S. colleges located 1500 miles away across the border. That questionable merger might have allowed EDMC, which is 41 percent owned by the investment bank Goldman Sachs, to evade a U.S. law aimed at protecting students against predatory schools peddling useless degrees.

The federal law, the 90/10 rule (20 U.S.C. section 1094(a)(24)) requires for-profit colleges to obtain at least 10 percent of their revenue from sources other than U.S. Department of Education-backed student grants and loans. The purpose is to keep federal aid away from schools on which almost no students would spend their own money, and that almost no outside scholarship fund would support. For-profit colleges now receive 25 percent of all of this taxpayer education money — some $33 billion a year.  But many of these schools offer a toxic mix of deceptive marketing and high-priced, low quality programs that often leave students with worthless credits, unimproved job prospects, and insurmountable debt. With 13 percent of U.S. college students, for-profit colleges now account for 47 percent of federal student loan defaults.

Some public attention has been focused on efforts by for-profit colleges to evade this 90-10 rule by relentlessly recruiting US troops and veterans, who receive military education benefits that, through manipulation by for-profit college lobbyists, somehow count toward the 10 percent non-federal aid measure. But it appears that for-profit colleges may also be engaged in merging campuses to accomplish the same aim, and keep federal money pouring into their coffers. And this new wrinkle, merging with a foreign campus, where most or all students would not be eligible for U.S. financial aid, opens up another loophole that, if unchecked, could subvert the purposes of the 90-10 law.

In 2012, EDMC made its Canadian campus, the wholly-owned Art Institute of Vancouver, a satellite campus of another EDMC school, the Art Institute of Phoenix. “Ex EDMC,” an anonymous commenter on one of my articles on Huffington Post, wrote last September that EDMC undertook this merger “in order to prevent AI Phoenix and its many satellite campuses from exceeding the 90% of revenue from U.S. government student loan threshold.” The poster added, “Approximately 90% of The Art Institute of Vancouver’s students are from Canada and none are eligible for U.S. government student loans (Title IV) for now.” The commenter claimed the merger was ”an intentional and apparently unethically [sic] attempt by EDMC to circumvent the 90/10 rule.” Ex EDMC concluded, “It is unclear why the U.S. Dept. of Education would allow any U.S. school to simply designate a foreign school with no Title IV funded students as a U.S. satellite campus in order to avoid being held accountable to the 90/10 rule.” (Ex EDMC posted a nearly identical comment on this website. The comments were hiding in plain site until a former for-profit college student, who is engaged in exposing the misdeeds of this industry, pointed them out to me.)

I was unable to locate Ex EDMC or to verify that he or she was ever actually affiliated with the company. I sought EDMC’s comment on the claim that the merger was undertaken for purposes of evading the law, but EDMC’s response (see below) did not shed much light on the situation. I would certainly be pleased to hear from Ex EDMC or anyone else with knowledge of what happened.

EDMC’s SEC disclosure forms do show that the Art Institute of Vancouver switched from being an independent campus accredited by a Canadian agency in 2010-11 to being a satellite of the Phoenix campus and thus accredited by the U.S. Accrediting Council for Independent Colleges and Schools (ACICS), at least by the time of a September 12, 2012, SEC filing.

A comprehensive report on the for-profit college industry released in 2012 by Tom Harkin (D-IA), chair of the Senate Health Education Labor and Pensions Committee, found  multiple schemes employed by for-profit colleges to evade various requirements of federal law. This was one:

Since for-profit colleges report 90/10 figures by [the federal] Office of Postsecondary Education ID (OPEID) numbers, instead of by campus, and one OPEID may contain multiple campuses, some companies consolidate and switch campuses between OPEIDs to lower their reported 90/10 number regardless of the proximity of the campus.

Harkin’s report noted that one of the other big for-profit college companies, Career Education Corporation, had recently sought approval from the Department of Education to consolidate 19 of its campuses into one; six of those campuses were over the 90 percent limit on federal aid. The Harkin investigation also found:

EDMC discussed internally a consolidation and reorganization of its campuses in late 2009 in part to address concerns with 90/10 issues at some campuses.

The Harkin report concluded that some for-profit colleges may also have been merging campuses to evade a separate federal provision, one that removes campuses from eligibility for federal aid if too many of their former students are defaulting on their student loans.

Harkin subsequently raised these issues with the Department of Education. A December 2012 letter to Secretary of Education Arne Duncan from Harkin and seven other Democratic Senators charged that “there is evidence” that for-profit colleges have merged campuses for federal reporting purposes “to avoid potential sanctions, including loss of federal financial aid eligibility.” In a recent letter responding to Senator Harkin, Secretary Duncan addressed the concern about using mergers to avoid the loss of federal aid eligibility under the 90/10 rule, but he wrote “nothing in the statute or regulations currently prevents companies that own more than one institution from applying for Department consent to combine them, or from applying to shift additional locations from one institution to another, in order to maintain eligibility under those provisions.”

However, the fact that “nothing … prevents” for-profit colleges from applying for consent to merge designations does not mean the Department of Education is required to approve every merger, no matter how questionable. And, as far as I know, no one has publicly pressed the issue of a for-profit college combining foreign campuses with U.S. campuses as a convenient way to evade the law.

I asked Barmak Nassirian, one of the smartest and most principled higher education experts, for his reaction. He responded:

I hadn’t heard of this novel scheme, but, if the allegation that EDMC is merging a Canadian stand-alone with a U.S. campus is true, it would certainly provide a new twist on Harkin’s concerns about the gaming of 90/10. Given the very high cache that U.S. credentials enjoy in many countries, I could see the for-profits setting up loss-leader “branch campuses” overseas, just to earn their 10 cents on the dollar there. This would be somewhat complicated by [U.S. Department of Education] Title IV regulatory requirements, as well as by local regulations (if any).

I contacted Jacquelyn Muller, Vice President for Communications and Public Relations at EDMC and asked her: Why did EDMC decide to make the Art Institute of Vancouver a satellite campus of the Art Institute of Phoenix? Was compliance with the federal 90/10 rule a consideration?  What does the Art Institute of Phoenix compliance with the 90/10 rule look like since the combination if you remove revenue from the Vancouver campus? Did the U.S. Department of Education provide consent for that combination? If so, when did EDMC make that request, and when did the Department approve it? Did the Department require that Art Institute of Vancouver obtain ACICS or other US accreditation? Did the Department mandate any additional actions in order for the merger to occur?

Muller sent this response:

The decision to make The Art Institute of Vancouver a branch of The Art Institute of Phoenix was approved by the Ministry of Advanced Education of British Columbia, ACICS (the institutional accreditor of The Art Institute of Phoenix), and the U.S. Department of Education. As a result of this change, students attending The Art Institute of Vancouver may now graduate from a U.S.-accredited institution and U.S. students who are eligible for U.S.-based Title IV aid will have the opportunity to apply for aid to study at The Art Institute of Vancouver, which has been recognized by The Princeton Review as one of the top ten “Undergraduate Schools to Study Video Game Design” for 2013.  Education Management is committed to providing students from a variety of socioeconomic and educational backgrounds the opportunity to improve their lives through higher education, and to assisting in improving and educating America’s workforce.  We remain dedicated to offering every advantage to our students in their pursuit of their career goals.

I asked the same questions of the U.S. Department of Education. Rather than express any concern about an action that had the potential to abuse the requirements of its own law, the Department told me only this:

We reviewed the application under the existing procedures and requirements, and Art Institute of Vancouver was approved as an additional location for the Art Institute of Phoenix last August.

The Department may not have anything to say about the EDMC action now, but there could be regulatory solutions to this problem. The Institute for College Access and Success, a non-profit focused on higher education policy issues, has already proposed reforms to address the issue of evading the 90/10 rule and the default rate rules through mergers generally: The Department of Education could either prohibit changes in OPEID reporting units, or require continued compliance under previous OPEID numbers for at least three years after any change. As to the specific evasion embodied by EDMC’s action, Nassirian suggests that we consider refining 90/10 to provide that schools obtain at least 10 percent of their revenue from non-federal money earned within U.S. borders.