December 11, 2018

Accreditor Withdraws Approval of For-Profit College Tied to Romney

Photo: Ben Lentz

 

The college accrediting agency ACCSC has revoked the accreditation of Vatterott College, based in Berkeley, Missouri. By letter dated December 5, ACCSC found that Vatterott had failed to make required improvements, including as to graduation rates and job placement success.

UPDATE 11-17-18 6:00 pm: Vatterott College abruptly shut down its operations nationwide this afternoon, closing all 15 of its campuses. The future for Vatterott students, who were taking programs in health, culinary, automotive, and other fields, is uncertain, but what is clear, as was also the case with this month’s sudden shutdown of Education Corp. of America schools, is that Betsy DeVos’s handover of policy decisions to the for-profit college industry increases the vulnerability of students to bad schools and bad outcomes. And here’s a twist: In 2017 Vatterott filed for receivership, and its owner, private equity firm TA Associates, was seeking a buyer for the chain. In January Vatterrott was reportedly on the verge of being acquired by the same Education Corp of America. But the deal was never completed.

Vatterott has a history of poor student outcomes and deceptive practices.

Yet incoming U.S. senator Mitt Romney (R-UT), who in 2016 notably attacked candidate Donald Trump for running the scam Trump University, has been a booster of, a campaign donation recipient of, and an investor in, TA Associates, the private equity firm that owns Vatterott.

Of the 800 career and for-profit college programs that flunked the first test of the Obama Administration’s gainful employment rule — which measures whether graduates earn enough to pay down their student loans — 40 were at Vatterott schools. Schools like Vatterott, and Virginia College, another major gainful employment flunker, have benefitted from Trump education secretary Betsy DeVos’s actions to delay and eliminate the gainful employment rule. But Education Corporation of America, operator of Virginia College, announced last week that it was shutting down all its campuses after running into trouble with its own accreditor, ACICS, as well as with its financial creditors, and even DeVos’s Department of Education.

DeVos last month reinstated ACICS, which had been dumped by the Obama administration for being asleep at the switch as for-profit college chains including Corinthian, ITT Tech, and Kaplan fleeced students and taxpayers — an action that signaled that DeVos’s Department would not demand strong oversight of schools by accreditors.

But some accreditors seem to have decided that they better step up anyway, perhaps evaluating Trump’s re-election chances and also the declining reputation of the for-profit college industry after a decade of scandal. (See the new documentary “Fail State.”)

That kind of accreditor vigilance spells trouble for bad schools like Vatterott. But such poor performance didn’t seem to trouble Mitt Romney.

As the 2012 GOP nomination contest neared the critical Iowa caucuses, Romney was asked by the Ames Tribune‘s editorial board what he planned to do about higher education. Romney’s response was crystal-clear: He liked for-profit colleges, including the University of Phoenix, and especially a Florida school called Full Sail University, which, he said, knew how to “hold down the cost of their education.”

In fact, Full Sail only knew how to hold down the cost of education for its owners; for students, it was the third most expensive college in America.

It also turned out that Full Sail’s owners, the principals of TA Associates, were among Romney’s top donors. The Romney Super PAC Restore Our Future received $329,900 from TA executives Kevin Landry and P. Andrews McLane, and another $135,000 from Bill Heavener, the CEO of Full Sail University. Landry also donated $89,900 to American Crossroads, the pro-Romney Super PAC founded by Karl Rove.

In praising Full Sail, Romney never mentioned that TA executives had contributed heavily to his campaign effort. Nor did he disclose that he was actually in business with them.

Mitt Romney’s son Tagg and 2012 campaign finance director Spencer Zwick had launched the private equity fund Solamere Capital in 2008 with a $10 million investment from Mitt Romney. In June 2012, the Romney campaign held a retreat in Park City, Utah, for about 200 wealthy donors. Remarkably, right outside the retreat, Solamere Capital held its own investor lunch meeting.

In March 2013, following his defeat in the presidential election, Romney took on a more formal role at Solamere, becoming chairman of the executive committee; according to the Solamere website, he remains in that role today.

Solamere describes itself as a “fund of funds” that allows its privileged investors to buy into high-end private equity firms. TA Associates is one of the firms that Solamere Capital has offered to its clients for investment, according to a prospectus sent to potential investors and obtained by the Boston Globe in 2011.

Another for-profit college owned by TA Associates is Vatterott College, acquired in 2009.

In 2014, a Missouri appeals court upheld a jury verdict against Vatterott for deceiving a single mom, Jennifer Kerr. A jury in Jackson County, MO, had awarded Kerr $27,676 in actual damages and $13 million in punitive damages; the trial judge cut the punitive award to about $2 million because state law caps these awards.

Kerr, from Lee’s Summit, Missouri, saw Vatterott’s TV ads and visited the campus in 2009 to pursue her dream of becoming a nurse.  A Vatterott recruiter told Kerr that the school didn’t have a nursing program, but it did offer a medical assistant’s degree. With that credential, the recruiter said, Kerr could make $15 to $17 an hour, and her Vatterott credits would transfer to a nursing program and put her on the “fast track” to being a nurse.

But after signing for more than $27,000 in loans and being in the program for over a year, Kerr discovered that her program wasn’t a medical assistant program at all — it was a medical office assistant program. You might not need college for that. Vatterott staff then told her that a medical assistant’s degree would require more classes and another $10,000.

Jennifer Kerr was not the first student to be deceived by Vatterott College.

The 2010-2012 comprehensive investigation of the for-profit college industry by then-Senator Tom Harkin (D-IA) obtained internal training documents from Vatterott that seemed to instruct recruiters  to use exploitative tactics: “We deal with people that live in the moment and for the moment. Their decision to start, stay in school or quit school is based more on emotion than logic. Pain is the greater motivator in the short term.”  Another Vatterott document described the target market for recruiters: “We serve the UN-DER world, Unemployed, Underpaid, Unsatisfied, Unskilled, Unprepared, Unsupported, Unmotivated, Unhappy, Underserved!”

After Michael Brown was shot to death by a police officer in Ferguson, Missouri, it was often reported that the young man was on the verge of attending college.  Less well known was the name and type of school that had signed him up and was ready to cash his federal financial aid checks: It was for-profit Vatterott.

Vatterott’s abuses have led to bad outcomes for enrolled students. The percentage of Vatterott students who default on their student loans within three years of dropping out or graduating has been a very-high 26.6 percent.

In 2009 and 2010, three Vatterott officials pleaded guilty to a criminal conspiracy to fraudulently obtain federal student grants and loans for ineligible students in 2005-06 by providing false general equivalency diplomas (GEDs) and doctoring financial aid forms.

Like Mitt Romney, Betsy DeVos has seemed unconcerned about Vatterott’s awful record. When DeVos moved to gut another of the Obama student protection rules, called borrower defense, her Department of Education named to its panel of negotiators for the rulemaking meetings Aaron Lacey, who from 2010 to 2014 worked as senior vice president of regulatory affairs and strategic development at Vatterott.