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.”

Will Mitch Daniels tell the heads of predatory for-profit colleges that they’re doing a great job?

Last year, the annual convention of owners and executives of for-profit colleges (University of Phoenix, The Art Institutes, Kaplan, etc.), held in Las Vegas, featured paid speakers George W. Bush and Michelle Rhee, and, for entertainment, a fake knockoff version of Creedence Clearwater Revival. After a year in which the truth about their shoddy practices finally sent many for-profit colleges into a tailspin, they will gather again in June in Orlando. This year’s meeting of their trade association, APSCU, will feature: former Indiana Governor Mitch Daniels (R); retired Chairman of the Joint Chiefs of Staff Admiral Mike Mullen; and … Kool and the Gang.  Or, really, Kool, and his brother; most of the old Gang, including lead singer J.T. Taylor, who sang your hits “Ladies Night” and “Celebration,” are long gone.

Last year, after I questioned Reformer Rhee’s decision to speak to the cynical barons of for-profit education — owners of the kinds of underperforming schools I thought she stood against — she pledged to deliver a tough message in her APSCU talk. But having been barred from attending the conference, we smuggled out a tape revealing that Rhee instead delivered a kinder, gentler message that barely even alluded to criticism of her hosts.

This year, we should again challenge APSCU’s keynote speakers — Governor Daniels and Admiral Mullen — to actually tell the blunt truth to APSCU’s members: that many in their industry, including most of the biggest players, have been doing a disservice to our country by peddling high-priced, low-quality programs that leave many students deep in debt and fleece the taxpayers who finance federal financial aid.

As an advocate of small government and fiscal austerity, Governor Daniels, who is now president of Purdue University, should question how an industry that has been receiving as much as $33 billion a year from taxpayers can continue to fight against federal reforms that would hold it accountable for waste, fraud, and abuse. Governor Daniels should understand that this is not a free market program but a government program — the biggest for-profit colleges receive about 86 percent of their revenue from taxpayers.

The industry continues to spend millions of those dollars on lobbying, advertising, lawyering, and campaign contributions to block common sense rules that would cut off federal aid to schools that consistently abuse their students. Daniels should tell the APSCU members that they should curb their arrogant lobbying campaign, improve their programs, and halt their misconduct.

Admiral Mullen has been a a strong advocate for higher education for service members and veterans. He has championed America’s community colleges; he even made an unexpected appearance at President Obama’s community college summit in 2010 to tout the achievements of those institutions.  Community colleges provide many of the same kinds of programs as for-profit colleges, often with higher quality classes and almost always at a much lower price for students.

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.

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.”

But Mullen, who recently joined the board of General Motors, should tell the for-profit colleges that if they don’t start fairly competing for students by offering better value for the money, rather than by using high-pressure boiler room tactics, that they can expect to be driven off military bases and towns, and that they can expect our troops and vets to get the message and stop enrolling.

Both Governor Daniels and Admiral Mullen should consider whether they are prepared to deliver tough messages to the wealthy APSCU barons who have caused so much harm. If they aren’t, then for the sake of their own reputations, the cause of fiscal sanity, and the welfare of America’s students, they should just stay home.

 This article also appears on Huffington Post. 

Harkin and his congressional colleagues, some Republicans as well as Democrats, have introduced a series of bills aimed at protecting servicemembers from for-profit college abuses. Troops and vets, as well as other potential students, are getting the message that these schools may be hazardous to their futures; enrollment is down, and the industry is in a tailspin.

The for-profit colleges lobbying group, APSCU, has responded by assembling a “Blue Ribbon Taskforce for Military and Veteran Education.” The task force plans to release its findings to the public next week, but APSCU circulated them to members last night, and Republic Report can share them with you now — a report and a separate brochure.

The task force mostly consisted of executives at various for-profit colleges, plus, as “special advisers,” officials from the American Legion, Veterans of Foreign Wars, and Student Veterans of America (SVA). SVA has sometimes been critical of misconduct by APSCU members.

The recommendations are nice enough, saying that for-profit colleges “should … provide accurate and complete information to prospective students,” but the report appears to exist on another planet, since it fails to acknowledge the widespread abuses by the sector that have been documented by Senator Harkin, the news media, and many others.

The real test will be whether these schools decide to change their ways and actually live up to higher standards. Steve Gunderson, APSCU’s CEO, told Stars and Stripes yesterday that he expects APSCU members to be evaluated “not by what we say we’ll do, but by our conduct.” According to Stars and Stripes, Gunderson “said many of the new guidelines will require some cultural changes for the schools in how they approach and cater to veterans, and represent more than a rubber stamp on existing programs.” If the APSCU schools really mean that, it would be good news. But several decades of misconduct by these for-profit colleges requires the public to watch carefully, and also requires Congress and the Administration to implement serious reforms that ensure that our troops and vets — and all our students — have real opportunities to build careers through higher education.

This article also appears on Huffington Post.

Several years of public scrutiny have exposed that many of America’s for-profit colleges are playing a cruel joke on students and taxpayers — high-priced, low-quality programs, sold through deceptive recruiting practices, that often leave students without good jobs and deep in debt. This scam has cost taxpayers as much as $33 billion in a single year. Worse, it has ruined the lives of students — veterans, single mothers, and others struggling to build a better future. For-profit colleges have 12 percent of U.S. college students but a shocking 47 percent of student loan defaults.

When the Obama Administration sought to implement common sense reforms to halt the worst abuses, the for-profit college companies – owned by Goldman Sachs, the Washington Post Company, and private equity firms, among others –unleashed a lobbying and public relations blitz – backed by campaign contributions to Capitol Hill. But if they managed to get irresponsible Members of Congress to stymie progress in Washington, they couldn’t conceal the hard truths about their cynical industry. Many potential students are now wary of their come ons, and the brakes have been applied to their shameless joy ride. Enrollments are way down, as are stock prices, and companies are closing campuses or shutting down entirely.

Instead of taking this opportunity to reform, to consider whether they could save their businesses by moving to a model that actually helps students train for good jobs, the industry’s big players appear to be digging in, and continuing to use their revenues — about 86 percent of which come from taxpayers — to engage in lobbying and propaganda aimed at convincing the public that everything is fine, that their schools are paragons of free-market innovation and upward mobility.

The latest and perhaps inevitable step in this expensive persuasion campaign is, of course, a movie. As the Chronicle of Higher Education reports, Michael E. Platt, CEO of a marketing company that helps find recruits for  for-profit colleges, has produced Reconstructing the Dream, a documentary purportedly about the need for colleges to get better at training students for careers.

But the trailers for the documentary reveal what appears to be an incendiary propaganda film, complete with stirring, emotional music, aimed at obscuring the facts about for-profit college abuses. ”Many politicians continue to manipulate the truth and serve the interests of the unions in order to keep the private sector from serving adult learners, creating a virtual, permanent underclass,” says the narrator in one clip — which was removed after a reporter for the Chronicle asked about it.

Platt told the Chronicle he took advice on shaping the film’s message from Steve Gunderson, president of the for-profit colleges’ main trade association, APSCU.

In the past two years, as the public has come to recognize that many for-profit colleges have been ripping off taxpayers and ruining students’ lives, enrollments have declined, and the once-mighty industry has gone into a tailspin. A number of schools, such as American Career Institute and ATI have abruptly shut down many or all of their campuses, leaving students out in the cold, their futures uncertain. The biggest companies in the sector, including the University of Phoenix, Career Education Corp., EDMC, Corinthian Colleges, and Washington Post-owned Kaplan, have downsized as their revenues and share prices have sharply plummeted.

Now, a small but increasing number of schools are pursuing a new survival strategy: transforming their for-profit institutions into more traditional non-profit schools. Indeed, at its last annual convention, held in Las Vegas, the industry’s trade association, APSCU, offered a presentation (pdf) by lawyers about just how to make such a conversion, as well as the pros and cons of doing so. But there are potential dangers to the public when one of today’s for-profit schools becomes a non-profit.

It’s easy to see why some for-profit college owners now might want to take their institutions non-profit — to escape the bad reputation of their sector; to become eligible for private, tax-deductible donations and more state grants; to enjoy tax-free status; and, perhaps above all, to avoid strengthened federal and state regulations aimed at preventing for-profit college abuses.

The biggest potential downside for changing, from the perspective of for-profit college owners, is that, under their present status, they have been reeling in a ton of money. This industry’s special brand of free market capitalism is almost entirely dependent on government cash — as much as $33 billion a year in federal funding for this industry, with many for-profit schools getting 85-90 percent of their revenue from taxpayers. Top executives and private equity investors have been taking home millions of these dollars every year. The previous CEO of Kaplan, Jonathan Grayer, received a $76 million compensation package when he resigned in November 2008. Todd Nelson of EDMC increased his pay from $1,812,996 in 2009 to $13 million in 2011, even as his company’s stock was falling.

What the rest of us should worry about is the prospect of some for-profit college executives, who have gotten rich by peddling a toxic mix of deceptive recruiting, low-quality programs, and sky-high prices, taking the helm of tax-exempt, non-profit charities that are supposed to serve the public interest. The concern is that some of these sharp operators may attempt to use their newly-transformed non-profit colleges as private piggy banks, or use their new status to continue selling predatory programs to vulnerable students — veterans, single mothers, immigrants, low-income people.

The most recent recipient of one of these sector change operations is Stevens-Henager College, headquartered in Ogden, Utah, which has about 10,000 students online and on ten campuses in Utah and Idaho. The school offers degrees in business, health care, information technology, and graphic arts.

Stevens-Henager’s CEO, Eric Juhlin, explained to the Idaho Statesman that the switch was made to allow the college to obtain private donations and, according to the paper, “to meet the long-term vision of its single shareholder, Carl Barney, who purchased Stevens-Henager about 15 years ago.”  The paper also noted that Juhlin is a board member of the Center for Excellence in Higher Education, “the new name for Stevens-Henager Inc.”

But there are reasons to be concerned about this new entrant to the non-profit college sector. Stevens-Henager and three affiliated schools were all, according to one of their admissions supervisors whom I reached by phone, converted to for-profit status on January 1, and their umbrella for-profit entity, actually called CollegeAmerica, Inc., became part of the non-profit Center for Excellence in Higher Education. But a new January 14 job posting, says that CollegeAmerica, Inc. is hiring and it “is a privately held company that … operates for-profit Colleges and owns Stevens-Henager Colleges in Idaho and Utah.” The supervisor I spoke with at the college, whatever its name is, said that despite the formal conversion, the school was still “in transition.”  The job posting is for an “admissions consultant,” but it is explained that the job is a “sales position” requiring “exceptional persistence” and the ability to work evenings and weekends, and that sounds a lot like the boiler-room style recruiting of for-profit colleges.

What kind of school has Stevens-Henager been? One of its employees wrote a letter to authorities alleging a lack of standards and integrity in the school’s recruiting: “Our admission representatives are required to enroll anyone and everyone. All entrance and diagnostic testing has been eliminated… Toothless and homeless people are not marketable and will never pay back student loans. We still enroll them….  Our director said, ‘Get 40 people and I don’t care what you say or do to get them.’” Numerous students have reported that the school only cares about making money, not about helping students.

Stevens-Henager and its affiliated colleges have established records of leaving their students deep in debt. For example, as of 2009, 40.2 percent of students of the Flagstaff, Arizona, campus of CollegeAmerica defaulted on their loans within three years. The figure was 38.8 percent at the CollegeAmerica campus in Denver, and a still-high 24.7 at the Stevens-Henager campus in West Haven, Utah. For comparison, the default rate at Michigan State University was 4.3 percent.

Carl Barney, who was sole owner of the for-profit incarnation of Stevens-Henager, obviously does not agree with those who have criticized his school. Barney wrote an impassioned defense of for-profit education less than two years ago, calling on his fellow owners to respond to what he considered unfair attacks on the sector. According to Barney:

Our sector of education has been under planned, massive attack from some government officials, government colleges and universities (our competitors), consumer groups, plaintiff attorneys, and teachers’ unions ad nauseum. And, into this unholy alliance, like vultures, we have discovered that short-sellers were the chief planners and orchestrators.

Barney argued that the for-profit sector was being attacked, through “ugly slander and denunciations by Senator [Tom] Harkin and promoted by some in the media,” because of the greed of Wall Street short-sellers who bet against the industry (a familiar claim by for-profit college executives); and because the sector is “enormously successful” and thus a threat to other colleges. A third reason claimed by Barney is

philosophic – the most powerful reason. It underlies and ‘justifies’ much of the disgraceful, unethical, and criminal activities of our adversaries: the Marxist view of profit…. There are many in Washington and in government colleges and universities who are convinced that profit is evil; and, therefore, what we do is evil…. Their view regarding profit as evil is their justification for vilifying us and for trying to damage us.

Barney is on the Advisory Board for the Clemson Institute for the Study of Capitalism and the board of the Ayn Rand Institute. Given Barney’s strong defense of the profit motive in higher education, how can it be that conversion of the school he owned into a non-profit meets his long-term vision for the school, as his subordinate told the Idaho Statesman?

And what is The Center for Excellence in Higher Education, the non-profit that now controls Stevens-Henager? Based in Indianapolis, the Center, according to its website, “was established by a small group of philanthropists who have donated millions of dollars to U.S. colleges and universities and are concerned about higher education’s continuing decline.” The Center was launched in 2007 with “$5 million in seed money from groups that have been skeptical of giving to colleges. They include the Marcus Foundation (headed by the co-founder of Home Depot), Templeton Foundation and John William Pope Foundation….” The Pope Foundation is chaired by well-known North Carolina conservative activist Art Pope.

The Center’s website says that “Through effective philanthropy, due diligence, proper governance, and management accountability… America’s colleges and universities can be transformed into high-performing institutions that prepare today’s students to be tomorrow’s leaders…. The Center for Excellence in Higher Education is committed to helping donors, alumni, trustees, elected officials, and college administrators pursue meaningful structural reforms.” The organization’s 2011 990 form filing with the Internal Revenue Service indicates that the Center has been relatively small, taking in contributions of $68,000 in 2010 and just over $1 million in 2011, with assets of $559,000. It’s not clear what in the Center’s track record has prepared it to actually run colleges.

Other recent conversions of for-profit colleges, including Keiser University and Remington College, both based in Florida, have raised concerns — including about the structure of the transaction, the salaries of the new non-profit college’s leadership, and disclosure to the public of relevant facts. (Keiser apparently remains a member of the for-profit college trade association, APSCU, even though it became a non-profit in January 2011. Indeed, Keiser’s chancellor, Arthur Keiser, remained the chairman of APSCU until July 2012.)

The presentation by lawyers at the APSCU convention last summer made clear the “regulatory advantages” of a for-profit like Stevens-Henager selling itself to a non-profit like the Center for Excellence in Higher Education. As a non-profit, a college would, after a year, no longer be subject to the federal government’s 90-10 rule, which requires for-profit schools to obtain at least 10 percent of their revenues from funds besides U.S. Department of Education financial aid. Many for-profit colleges struggle to meet this requirement, hovering around 86 percent, even though military and veterans benefits count on the non-federal side of the ledger. Now, some Members of Congress are talking about protecting students by making this rule tougher, which would increase the challenge of complying for schools that are heavily dependent on federal money.

Senator Harkin’s HELP committee has concluded that Keiser University’s concern about its compliance with the 90/10 rule “likely played a role in Keiser’s conversion to non-profit status.” The committee report added, “Conversion to non-profit status to avoid a regulation would seem to defeat the purpose of the non-profit tax status, which is to provide an educational and charitable public purpose that justifies exemption from Federal taxes.”

Non-profit status also allows colleges to generally avoid the Obama Administration’s “gainful employment” rule. This regulation is currently blocked by a lawsuit filed by APSCU, but if implemented would penalize for-profit college and trade school programs for consistently leaving students with overwhelming debt. In the Department of Education’s initial evaluation of compliance with the gainful employment rule, two out of eight Stevens-Henager programs, one out of two programs at another affliated school, California College San Diego, and all four CollegeAmerica programs failed all three prongs of the federal test. In that light, the appeal for the school of conversion to non-profit status — despite its founder’s love of for-profit education — becomes clear.

But the APSCU legal presentation is also replete with warnings that becoming a non-profit could put a real damper on the capacity of the barons who run for-profit colleges to keep raking in big bucks from their schools. Their school must be sold to the non-profit at current market value, meaning much less than many schools were worth a few years ago, before the industry took a sharp dive. Compensation payable to former owners by the new for-profit “is limited by federal income tax laws.” Non-profits have greater public disclosure requirements.  There are restrictions on engaging in ancillary for-profit activities and restrictions on political activity. And, of course, “Owners lose control of institution.” The dreaded loss of control. The question is whether the once all-powerful owners of for-profit institutions will accept all these limitations, or instead will look for ways to get around them.

Government authorities, including the Department of Education and Internal Revenue Service, should carefully monitor these conversions of for-profit colleges into non-profit institutions — whether the financial transaction is structured in a way that unjustly enriches a few, whether the new non-profit executives are paying themselves too much for a non-profit, tax-exempt institution, and whether some of these schools use their new status as a license to continue to fleece students and taxpayers.

This article also appears on Huffington Post. 

So, having bet on the wrong horse, and with its enrollments and revenues already in serious decline, what does the industry say to Obama now?  We’re your best friends.

The chief lobbyist for the industry, former Congressman Steve Gunderson, writes in Roll Call:

[T]he president and private for-profit schools have a common mission, and … neither can succeed without the other’s success.

President Barack Obama received historic levels of support from women, African- Americans, Hispanics and young adults up to age 30. … This base of political support is the very description of the students served by our private-sector colleges. More than 60 percent of our students are women and about 40 percent are African-American or Hispanic. This link provides an opportunity for us to advance our common interests….

Considering the legions of working parents, single moms, veterans and underserved citizens who use our schools to bring them closer to a better life, our institutions are part of the vision the president communicated.

OK, the nerve of some people. I’ve heard Gunderson say more than once that the companies who pay his salary “should be congratulated” for enrolling students of color and other underserved people. But simply signing up students and depositing their federal checks is much, much worse than doing nothing for them if your school does not provide a quality education, a valued degree, or reasonable job placement assistance. Schools should be congratulated if they actually do those things for students.

Sadly, many of the schools that are part of Mr. Gunderson’s trade association, APSCU, do no such thing. They excel at recruiting students with misleading and coercive recruiting tactics. They often fail at everything else, leaving students across the country with insurmountable debt that ruins their lives. Several of them were profiled this week in a report from ABC News. Some reach out to me almost every week, with heartbreaking stories of big for-profit colleges promising them great jobs with big salaries at the end of their studies, but leaving them with weak programs, credits that won’t transfer to traditional colleges, phony career assistance efforts, and degrees that are often considered a joke by employers. They owe tens of thousands, even over $100,000, in student loan debt, debt that can’t be discharged in bankruptcy, and they have no earthly idea how they’ll ever pay it back.

Far from being the friends and empowerers of people of color, women, veterans, and low-income people, many of the big for-profit colleges have been some of their worst predators.

If Gunderson’s trade association truly wants to, as he says, “work with [this] administration,” it should begin by dropping its expensive lawsuit aimed at derailing common sense Obama rules that would weed out the worst for-profit programs. It should embrace a genuine reform agenda that protects students against fraud and rewards those schools that truly help students learn and build careers.

This article also appears on Huffington Post.

In May, the FBI raided FastTrain College amid allegations of fraudulent marketing practices. In June, 20 state attorneys general forced marketing company QuinStreet to shut down GIBill.com, a website that deceived countless veterans into believing they were on a government site that offered unbiased education advice, when in fact the site shilled for for-profit colleges. Both FastTrain and QuinStreet were and remain members of APSCU.

Now the Justice Department has filed a 47-page civil complaint in federal court in Texas charging the trade school ATI with defrauding the government. Dallas TV reporter Byron Harris has been exposing ATI’s fraudulent practices for several years now, but the new federal suit adds many new revelations about how ATI, which has campuses in Texas, Oklahoma, New Mexico, and Florida, has abused students, taxpayers, and authorities.

According to the federal complaint, from 2007 to 2010, ATI, which offers programs in fields including health care, information technology, and car repair, “engaged in a widespread scheme to defraud” federal and Texas authorities in order to receive federal funding to which it wasn’t entitled.  Some details:

• Texas regulations require career training schools to have job placement rates of at least 60 percent in order to keep their state licenses, which are necessary for federal financial aid.  According to the complaint, ATI reached that target by lying: making up false jobs and false employers; inducing a worker at a trailer manufacturer to falsely tell authorities that ATI graduates worked there; creating fake business cards for students that the school couldn’t place; counting business administration graduates as placed in their field if they worked as cashiers; and employing graduates for a single day past graduation at ATI itself and then counting them as placed.
• ATI allegedly lied to prospective students about jobs they could get and salaries they could earn through ATI programs.
• ATI enrolled students with prior felony convictions in criminal justice  and health care programs without telling them that they likely would be barred from many jobs in those fields.  An ATI admissions staffer who warned students that their criminal records could present challenges was reprimanded and told to stop because she was ruining sales.
• ATI created fake high school diplomas of prospective students to permit unqualified students to enroll.
• ATI falsely told students who had previously dropped out of ATI that their current federal loans would be forgiven if they re-enrolled; ATI in fact had no intention of paying off such debt.
• ATI employees reported false information about individual students, such as counseling students to falsely list relatives’ children as dependents, in order to obtain more student financial aid than was warranted.  Employees who complained about such practices were reprimanded by management.
• ATI pressured reluctant students to attend classes for at least five days, which allowed ATI to bank a student’s financial aid. ATI regularly changed grades and attendance records for students who weren’t meeting minimum requirements.
• Classes were overcrowded, teaching was poor, equipment was out of date, and facilities were badly-maintained. “For example, for months the air-conditioning in Campus 10 [in Dallas] was not functioning, despite the fact that air-conditioning repair was a program offered at that campus.”
• ATI falsified and concealed documents in advance of audits by Texas regulators.

According to the complaint, top ATI officials, including ATI’s CEO and its Executive Vice President of Operations, “were aware of and / or encouraged the fraud.”

All of this brazen misconduct had one aim — to defraud federal taxpayers out of ATI’s share of the $32 billion dollars annually that flows to for-profit colleges. (About $236 million dollars in student aid has gone to ATI since 2005.) And it had one terrible outcome — leaving thousands of students deep in debt from ATI’s high-priced, low-quality programs.

ATI is, you guessed it, also an APSCU member. In fact, a tweet that came my way reminds me that ATI’s CEO Arthur Benjamin served until recently on APSCU’s board of directors.

Loyalty is terrific. But those honest and reasonably priced for-profit colleges that are part of APSCU might want to start asking why APSCU continues to fight against reasonable rules that would penalize the worst of the worst scam schools and thus make it easier for well-performing schools to compete. They might also want to ask why APSCU continues to include within its ranks schools that have been caught red-handed ripping people off and ruining their lives.

Brozek described how she easily climbed the corporate ladder at ITT Tech, eventually becoming promoted to director of recruitment in her region.   She and her colleagues who met their goals — measured primarily on the number of students enrolled or “asses in classes” and “kiss ‘em and sit ‘em,” according to Brozek — were rewarded with salary increases. Those who failed to meet their goals were demoted and sometimes even terminated.

That wasn’t Brozek’s problem. She was really good at recruiting, receiving awards and accolades, thanks to mastering recruitment techniques including the “pain funnel.” The pain funnel was used to ”demoralize potential applicants by discussing their life’s shortcomings in order to have them enroll, where their life would improve.” Such techniques are both “predatory” and “very successful,” she said. Students would enroll with the ”expectation that if they spend enough money, whether through savings or students loans, their problems would be solved,” Brozek said. “For a large percentage of students who enrolled, this was simply not the case.”

She and other recruiters skimmed over statistics on poor retention and job placement rates for ITT Tech graduates, instead emphasizing  potential success.

Brozek no longer works at ITT Tech. Her story is an important reminder that for-profit school aren’t simply using taxpayer dollars to make profit with little oversight or accountability — they’re making that profit by knowingly hurting vulnerable members of society — disadvantaged or minority young people, veterans, immigrants, and former prisoners.

Sally Stroup will return to lobbying for for-profit colleges.

The nation’s major for-profit colleges show no sign that they are ready to accept the inevitable: that in a time of enormous budget pressures, they cannot continue to siphon off 32 billion dollars a year in federal student aid for high-priced, low-quality programs that often leave students without jobs and deep in debt. They show no sign of agreeing to reasonable rules that would bar deceptive marketing and recruiting and cut off aid to college programs that are failing students. Instead, the for-profit colleges continue to reserve a big chunk of their profits to relentless lobbying and lawyering to protect their appalling windfall at the expense of students and taxpayers.

Steve Gunderson, the former Republican congressman from Wisconsin who since February has headed APSCU, the for-profit college’s lobby group, seems like a nice guy.  His arrival was greeted by suggestions of a kinder, gentler era for the association and its members, who had deployed a vicious derecho of high-priced lobbyists to thwart common sense accountability rules proposed by the Obama Administration. But Gunderson, who seems to have lost his last association job and surely is under strong pressure from the arrogant CEOs on his board of directors, has manned up.

He has sought to make Terry Hartle, chief Washington lobbyist for America’s traditional colleges, his new best friend, looking for common ground against regulation. He denounced President Obama’s initiative to protect America’s troops and veterans from fraudulent practices by for-profits as “deeply unfortunate.” He has continued to use our tax money for expensive lawyers who use tricky arguments to derail and delay the Obama Administration’s rules. And, to attendees at APSCU’s recent convention in Las Vegas, he made the ridiculous and inflammatory assertion that critics of the industry are driven by “their political or ideological agenda.”

And now the top aide that Gunderson inherited, Executive Vice President & Legal Counsel Brian Moran has “submitted his resignation” and will be replaced by Sally Stroup. Republic Report firmly believed that Moran’s duel roles as APSCU lobbyist and chairman of the Virginia Democratic Party represented an unacceptable conflict of interest, but his replacement presents a new set of troubling issues.

While Brian Moran came to the job with little background in federal higher education policy, Stroup is a long-time specialist in the field — with a  subspecialty in promoting the interests of private companies that seek excessive compensation from taxpayers while performing poorly for students.

As a senior Republican staffer on Capitol Hill in the 1990′s, Sally Stroup allegedly worked to block an effort by the Clinton Administration to end loopholes that allowed banks to inappropriately inflate the enormous subsidies they received for issuing federal student loans. Stroup then became a lobbyist for the largest for-profit college, the University of Phoenix. When Stroup subsequently served George W. Bush as Assistant Secretary of Education, her department made the decision to gut enforcement of rules to prevent abusive recruiting practices by for-profit colleges. Most recently, Stroup has been senior vice president at Scantron, the educational testing company that profits handsomely from the endless test-taking required by Bush’s No Child Left Behind law. Scantron was, until recently, a member of the controversial corporate front organization ALEC. APSCU remains a member.

Stroup is considered a strong manager, and she reportedly retains strong ties to some career staff at the Department of Education. With APSCU now boasting an all-GOP leadership team, the industry seems to be betting on a Romney victory, or, failing that, a strategy of blocking reforms through deepening ties with the Hill Republican leadership.  With so much money available for lobbying, advertising, and campaign contributions, the for-profit college industry is not giving an inch. Advocates for students and taxpayers have made great strides in recent years toward bringing real reform. They need to redouble their efforts to persuade the sector that its only chance to succeed is to change its business model and compete to actually prepare students for careers, rather than continuing to deceive and abuse.

He blew us off, saying that our reporting was “totally unfair” and that there was “absolutely not” any conflict between being chair of the Democratic Party and being a corporate lobbyist opposed to the Democratic president’s agenda.

In June, we again asked Moran why he continues to work for APSCU, even after the revelation that it is part of the American Legislative Exchange Council (ALEC), which works for a corporate agenda in state legislatures nationwide.  Last month the party Moran heads called on state legislators to end their affiliation with ALEC. But Moran continued to defend his role with ALEC member APSCU.

It now appears that Moran may have been feeling more heat than he let on. APSCU announced that Moran will resign from the trade group on August 1st.

Moran’s departure may be another sign that APSCU — and the industry it represents — is not invincible. The for-profit colleges may have a lot of money, a lot of connections, and a lot of lobbyists, but their representatives are still vulnerable to some good old fashioned public outrage. On the other hand, the move could merely be APSCU trading up from Moran to a more capable higher education hand, Bush Education Department official Sally Stroup.