Gunderson’s reaction to hearing cold hard facts from Neiween about coercive and deceptive recruiting aimed at our troops was to return to whining that critics, such as subcommittee chair Senator Dick Durbin, were demonizing his industry.
As he did at the Department of Education hearing, Gunderson began by asserting that he represented not only his member for-profit colleges but also “the millions of students who attend our institutions.” Many current and for-profit college students who have been deceived and abused by APSCU members would beg to differ with the assertion that Gunderson represents them.
Durbin raised with Gunderson an important concern regarding the federal 90/10 rule, which requires for-profit colleges to obtain at least 10 percent of their revenue from sources other than Department of Education-managed financial aid — on the theory that schools that cannot get anyone to pay out of their own pockets are not worth propping up. As Durbin noted, Pentagon and VA education aid is not counted as federal aid under the 90/10 rule, a situation that gives schools a heavy incentive to pack their classes with troops and veterans, whom the industry sees, in the words of federal oversight official Holly Petraeus, as “dollar signs in uniform.”
Gunderson responded with the remarkable assertion that “most people believe” that federal education aid coming from the Defense Department and VA “are not government funds.”
Gunderson’s argument was that troops and veterans had earned such education aid through their service. While it was nice of Gunderson to recognize the contributions of our men and women in uniform, his analysis did not make up for his industry’s abysmal record of misleading, overcharging, and underserving them. And it defies the dictionary and congressional spending rules to suggest that the money is not federal money. Only in the twisted world of the laws governing for-profit colleges, laws written under the heavy influence of cash-bearing lobbyists, is such federal money not treated as federal money.
Gunderson also told Durbin he would not defend a for-profit college that had engaged in bad acts. Instead, he said his role was to “lift up the sector.” Durbin responded that unless there are serious rules to prevent abuses, “You’re covering up for the bad guys.” And, indeed, by aggressively opposing minimal accountability standards for the industry, Gunderson is doing just that. Not only has Gunderson opposed the gainful employment rule, he also called President Obama’s 2012 executive order to protect our vets against for-profit college recruiting abuses a “deeply unfortunate development.”
While Gunderson may not actively defend his member schools when they are caught engaging in bad behavior, nor has he criticized them. Most of the major for-profit college companies are under investigation for fraud, deception, or other bad acts. Various state attorneys general are investigating Career Education Corp. (CEC), Corinthian Colleges, DeVry, Education Management Corp. (EDMC), ITT, Kaplan, and University of Phoenix. 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. Corinthian has been under investigation by at least five other state attorneys general: Florida, Illinois, Massachusetts, New York, and Oregon, as well as by the federal Consumer Financial Protection Bureau and the Securities and Exchange Commission, which recently issued a subpoena to the company for documents relating to recruitment, attendance, degree completion, job placement, loan defaults, and compliance with Department of Education regulations.
The SEC also is investigating CEC, EDMC, and ITT. ITT and Kaplan were also exposed by Senator Tom Harkin for creating training documents that outlined heavy-handed tactics aimed at exploiting prospective students’ “pain” and shame.
Every one of those for-profit college companies, with the exception of the University of Phoenix, is a current member of APSCU. Yet APSCU generally says nothing when its members are accused of, or receive penalties for, bad acts.
Last September, I wrote about how APSCU stayed silent about three other companies that had landed in hot water: (1) FastTrain College, raided by the FBI amid allegations of fraudulent marketing practices; (2) the marketing firm QuinStreet, forced by 20 state attorneys general to shut down GIBill.com, a website that deceived countless veterans into believing they were on a government site that offered unbiased information, when in fact the site shilled for for-profit colleges; and (3) ATI, charged by the Justice Department in a civil complaint with having “engaged in a widespread scheme to defraud” federal and Texas authorities in order to receive federal funding to which it wasn’t entitled. All three companies were members of APSCU at the time. Quinstreet still is, but it looks like since then FastTrain and ATI have disappeared from APSCU’s membership roster. I’d love to know why.
It doesn’t have to be this way. Rather than advantage the schools that are systematically ruining students’ lives with deceptive recruiting, high prices, and weak programs, a trade association of for-profit colleges could instead work to advantage those honest member schools who actually are helping students to learn and train for careers. Such an organization could cooperate with the Department of Education to establish rules that reward good schools and strip federal funding from bad ones. Over the long term, that is the only way that for-profit higher education can thrive. But APSCU, instead, appears to subscribe to the quick buck ethos of its biggest, wealthiest, most powerful members: make all the money you can before the truth catches up with, and students — veterans, single parents, immigrants, and other struggling Americans — be damned.
This article also appears on Huffington Post.