February 18, 2016

Students Testify: For-Profit Colleges Stole Our Futures


After six years of engagement on the issue of America’s predatory for-profit colleges, I feel I’ve seen it all — every kind of account of students deceived and abused by cynical college operators who have taken billions in federal student aid money, of slick industry lobbyists using campaign cash to avoid accountability measures, of government overseers bought off or asleep at the switch. But Wednesday, at the latest round of “negotiated rulemaking” sessions to draft new regulations governing claims by student borrowers that they were defrauded, my eyes were opened wide yet again.

Wednesday morning, I saw the U.S. Department of Education seemingly abandon, at least temporarily, its commitment to provide wide-ranging debt relief to defrauded students. I already wrote an article about that.

Wednesday afternoon, I saw more.  Remarkable obliviousness or indifference to the plight of students. Followed by a parade of students, all dressed in black but diverse in age, race, and background, with stories of how they were deceived by sophisticated recruiting operations into substandard programs that left with them student loan debt as high as $172,000.

Some of these former students are homeless, some just dead broke.  Some are now refusing to pay the loans, while others keep sending checks.  Some were visibly nervous speaking, others more confident.  All are courageous.  All dream of a better future, and they keep fighting to get there.  Today they stood up in Washington DC on behalf of all the people in their shoes.  It was sad, maddening, and uplifting all at once.

Makenzie Vasquez, age 22, told how the San Jose campus of Everest College, operated by noxious Corinthian Colleges, lied to her and left her $30,000 in debt with no degree. In 2012, recruiters for the school’s medical assisting certificate program welcomed her and led her to a room where they promised big salaries. They told her only two people in the last class had failed to graduate. Vasquez’s parents had not attended college. She was excited.

Her program, however, was marked by “teachers who weren’t there.” A student with two months’ experience showed other students how to draw blood.

Vasquez’s budget was tight, and she faced difficulty when Everest started asking students for an additional $50 a month. She told the administration that she barely had money for food, and they told her “I needed to get my priorities straight.” When she missed a payment anyway, she was dropped from the program. She waited tables at a pizza restaurant.

Only later did she find out that Corinthian Colleges was under investigation by multiple law enforcement agencies. The school collapsed last year under the weight of these probes, congressional and media exposes of its abuses, and its own financial mismanagement.

Vasquez said that nearly every student at her campus was African American or Latino.

As Vasquez spoke, I thought of my own two children, about her age, and how it would break any parent’s heart to see their child in such a situation — nothing to show for months of study, nothing except a bill she could not possibly afford to pay.

Before Vasquez and her fellow debtors had risen to speak, the negotiators, representing a wide range of interests from colleges to accreditors to legal aid lawyers, were engaging with Department officials on drafting new rules to govern what to do when students claim, as a defense to repaying their student loans, that their school mistreated them.

One of the advocates for students pointed out that the Department’s proposed rules only seemed to give students a chance to get off the hook if their school had engaged in misrepresentations, rather then, for example, recruiting that is coercive but without actual lies being told.  One of the Department’s representatives, a dedicated career lawyer with a deep knowledge of federal education law, countered that the colleges’ high-pressure tactics centered around deceptions, such as saying falsely that the student had to sign up immediately or lose their slot in the class.  But as the student advocates retorted, some of the most notorious misconduct by for-profit colleges has involved recruiting students by “poking their pain,” shaming them, telling them their lives have been worthless, that they have let down their families — emotionally manipulative efforts, with no misstatements of fact needed.

When one of the student representatives on the panel subsequently mentioned the common industry tactic of telephoning students over and over, carpeting bombing their phones multiple times a day to try to wear them down and push them to enroll, the Department lawyer responded that the solution was simply to not pick up the phone.

Then lawyer Dennis Cariello, representing the for-profit college industry, endorsed the Department’s ill-conceived proposal that students have only two years to assert any defense to repaying their federal loans — even though there is no statute of limitations on the debt collectors seeking payment from the students.  (That would be like a state having no statute of limitations on murder but barring any claim of self-defense not made within two years.)  Cariello said he was “fine” with a two-year time limit on student defenses. His first reason was that students should be able to go take up any problems with the school administration — an often fruitless approach with for-profit colleges, as the Century Foundation’s Tariq Habash discussed just this morning.  Second, Cariello reasoned, students who find themselves in a program that is subpar or not as the school promised should be able to figure that out pretty quick and seek relief.

What Cariello’s glib analysis ignored is that many for-profit college students may be the first in their family to attend colleges, are new immigrants, or might otherwise simply not realize their program is defective or that there is a means to complain until much later.  Often the student, reinforced by messages from school officials, concludes that she is one who messed up. Only later, when the student finds her school and her degree are considered a non-starter, even a joke, by many employers, or when she learns that the school is under law enforcement investigation for deceptive marketing, and that the claims that the school recruiter made to her were false, does the student begin to realize that she has been ripped off.

After these discussions, it was time for members of the public to speak.  The students readied themselves, but the first speaker instead was Nicole Elam, the vice president for government affairs at one of the biggest for-profit college companies, and possessor of one of the most troubling records, ITT Tech.  Elam took issue with characterizations by some negotiators at prior sessions regarding law enforcement investigations of, and loan default rates, at ITT.

The Department also distributed at the session a January 18 letter from ITT’s Elam to the Department’s Gail McLarnon complaining of such negotiator comments. This may have been the trigger, or one of the triggers, for the rulemaking’s outside mediator to make the extraordinary request in the morning session that negotiators refrain from making negative comments about specific colleges, because those colleges were contacting the Department to complain, creating work for Department staff.

Amazingly, when Elam rose to speak, this same mediator, seeing that one of the former for-profit students in the room seemed to be recording the proceedings with his phone, stared and asked disapprovingly, “You’re filming this?” Several people in the room (OK, including me), responded that the event was a public meeting, and the mediator held her fire.

So the students’ remarks were recorded, and you can watch them here. (The same group of former students will meet Thursday on Capitol Hill with Senators Dick Durbin (D-IL), Elizabeth Warren (D-MA), and Richard Blumenthal (D-CT).) Here’s some of what they said Wednesday:

Ami Schneider owes $108,000 from attending EDMC’s Illinois Art Institute, which, she says, enticed her with over-inflated job placement rates.  “If I had received the truth,” she said, “instead of misrepresented placement rates, I’d never have enrolled at an EDMC school.” She graduated but can’t find a job in her field, so her mother has postponed retirement to help pay back Ami’s debt.  (Ami’s loans are through the government’s old FFEL program, which the Department keeps stubbornly leaving out of its debt relief proposals, even though for students it was equivalent to the Direct Loans program that is now the norm.)

Joe White, with service in the National Guard, owes $165,000 for a degree from ITT Tech but also did not get a job in his field. He says the school did not tell him that some of the debt he was taking out was in high-interest private loans. He says ITT had low quality programs and that the school’s job placement effort consisted of links to ads on Monster.com.

Alyse Zachary owes $30,000 for studying computer forensics at ITT.  School officials called her into their office at one point and told her she would be “kicked out of school” if she didn’t sign up for an expensive private loan. She also discovered that better programs would not accept her ITT credits for transfer. It took her six years, and the collapse of Corinthian Colleges, to learn about the possibility of asserting a defense to loan repayment — so much for the two year statute of limitations the Department proposed. She says she got an email at some point promising a $5000 a month job, but when she clicked, she landed on an ITT Tech page — spammed by the school that had promised to change her future.

Danielle Adorno got three to four calls per day from an Art Institutes recruiter, who told her that more than 90 percent of culinary program graduates got jobs, with starting salaries around $40,000. None of that was true, and she did not find work in her field. She makes $10 an hour, and she owes $26,652 for nine months of study.  She says she and her husband and young child live in poverty and will “never have a car or a house.”

Alicia Stevens is seventy years old. At 59, she went back to school at Corinthian’s Florida Metropolitan University, which, she says, signed her up for a private loan without her knowledge. When she got a job interview, with no help from the school, the interviewer told her that a degree from that school meant: no job.  She owes $33,000 and says she may end up living in her car.

Pam Hunt, another former Corinthian student, owes $172,000 for studying criminal justice. She was promised job placement help, but that meant, again, just links to Internet job sites.  She works as a patient care assistant for $15 an hour. She was offered the chance to buy the house she rents, but couldn’t get a mortgage because of her student loan debt. So she’s homeless with five kids, one severely disabled.

Those who blame the poor for their ills should listen to those people.  They all tried to do something to improve their economic outlooks.  But they ended up lured by the deceptions of predatory college companies, many of them owned, at the time, by Wall Street giants like Goldman Sachs (EDMC), Wells Fargo (Corinthian), and the Washington Post Company (Corinthian, as well as Kaplan).  The cream of New York and DC society — men like Jeffrey Leeds and Donald Graham — and powerful donors to the Democratic and Republican parties — John Sperling, Todd Nelson — have gotten richer off the backs of these men and women, plus U.S. taxpayers. For-profit colleges have been getting as much as $32 billion a year from federal funding.

Lobbyists for various big for-profit schools — DeVry, Kaplan, University of Phoenix, and others — sat in the audience at the rulemaking. A few of them sometimes roll their eyes at each other when representatives of students speak at these sessions. But most at least appeared slightly more reflective as the students spoke.  Toward the end of the students’ statements, a few of these lobbyists quietly shuffled out of the hearing room, like disappointed sports fans heading out early when the home team is about to lose.

Meanwhile, one of the Department of Education’s representatives got up from the negotiating table and stood against the wall.

Many of the students asked the same question that was starkly posed in a recent front-page New York Times article: With all the destruction of students’ financial futures caused by big predatory for-profit colleges, with so many of the students now claiming fraud and demanding debt relief that could cost taxpayers billions, with mounting law enforcement investigations of these same companies, and with some of the companies themselves in irresponsible, precarious financial shape, why does the Department of Education keep sending these companies billions of our tax dollars, and in so doing, continue bestowing the schools with a Good Housekeeping seal that tells students it’s good to enroll?

I just don’t know the answer.  But, based on experience, I am confident of this: On Wednesday, hundreds more students were enticed into signing up to attend, and committed more of our taxpayer dollars to, the very same high-priced, low-quality for-profit colleges that have caused so much misery to the former students who spoke at the Department of Education meeting.

This article also appears on Huffington Post.