February 14, 2012

Corinthian Colleges, For-Profit School With Record Of Abusing Underserved Communities, Gives $1 Million to The Urban League

Corinthian Colleges, For-Profit School With Record Of Abusing Underserved Communities, Gives  Million to The Urban League
Corinthian Colleges CEO Jack Massimino was paid $3.4 million in 2011.

Corinthian Colleges CEO Jack Massimino and National Urban League CEO Marc Morial held a conference call this afternoon to announce an “Historic Educational Partnership.” Corinthian, a for-profit education company, plans to provide “approximately” $1 million for an Urban League program to help 200 students in Orlando, Florida, and Pittsburgh, Pennsylvania, to prepare for the GED exam so they can pursue college. The Urban League has made extraordinary contributions to our country, and GED preparation programs deserve strong support, but there are questions about how Corinthian earned this money, and whether such gifts from for-profit schools to non-profit groups are aimed at neutralizing potential critics.

The National Urban League’s mission is “to provide economic empowerment, educational opportunities and the guarantee of civil rights for the underserved in America.”  But Corinthian, which operates under the school names Everest, Heald, and Wyotech, has one of the worst records in the for-profit education sector; it has taken advantage of underserved students, leaving them in debt and without economic opportunity.

  • 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 288 Texas students over four years.
  • 66.5 percent of Corinthian associate degree students drop out, as do 59.2 percent of 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.
  • 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.

It’s also legitimate to ask whether a Corinthian-backed GED prep program is aimed in part at drawing more students into Corinthian college programs, which are available in the same Orlando and Pittsburgh areas.  Corinthian CEO Massimino said on the company’s February 1, 2012, earnings call that the company was considering expanding its own free GED courses in order to boost enrollment and that “some portion of those who succeed in passing the [GED] exam could potentially enroll in post-secondary education at Everest or elsewhere.”

Last year, during the debate over a proposed Obama Administration regulation to hold career colleges accountable, Urban League CEO Morial published in the Washington Post an op-ed  criticizing the proposed regulation, the same regulation that Corinthian spent millions to oppose. (In typical Post fashion, the piece did not include a disclosure that the Washington Post Company itself owns Kaplan, one of the largest for-profit colleges.  The Post Company also owned at least eight percent of — wait for it — Corinthian Colleges. )  In a letter to the Post editor, my then-colleague, Angela Peoples, wrote  that rather than criticizing the proposed rule, “The National Urban League should be encouraged that the Obama administration is pursuing means to direct resources to programs that help – not harm – our most disadvantaged communities.”

On today’s conference call, Morial, the former mayor of New Orleans, said that Corinthian “has a long history of preparing students for careers that are in demand.”  I pushed the button — twice — to ask a question on the conference call, but I was not called on.  Instead there were half a dozen softball questions, mostly from non-reporters, and the call was over in 15 minutes.

Fortunately low-income communities have 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 were 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. Earlier this month, Rep. Maxine Waters (D-CA), wrote 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.”

Rep. Keith Ellison discussed for-profit college abuses during a key House debate a year ago. See the video above.

(Disclosure: In 2009, while I was the director of Campus Progress and senior vice president of the Center for American Progress, Campus Progress / CAP accepted a grant from the University of Phoenix Foundation, a charity associated with the nation’s largest for-profit college.  This occurred before the fight over the Obama Administration’s proposed regulations to hold for-profit colleges accountable and, frankly, before I was aware of the magnitude of problems in the for-profit college industry.  The grant was for general support and did not require Campus Progress to work on any particular issues or activities, and nor did the University of Phoenix or its foundation attempt to lobby us or ask us to take any position on policy issues related to for-profit colleges.  In fact, Campus Progress soon became one of the most active public proponents of greater accountability for the for-profit college sector.)