May 31, 2018

DeVos Dystopia: More Art Institutes and Woz U Staff Speak

With Trump Education Secretary Betsy DeVos having turned over her Department’s policies to lobbyists for the very predatory colleges that have ripped off students and taxpayers for billions of dollars, many of the bad actors in the for-profit college industry have accelerated a wave of conversions to non-profit status, aimed at freeing them from the few remaining federal regulations and from the stigma that their bad behavior created. True to form, DeVos is approving these suspicious transformations of predatory schools — clever deals that allow for-profit insiders to keep making big money, despite the non-profit designation.

What is the impact on students?

Earlier this month, Republic Report wrote about Dream Center Education Holdings (DCEH), a new offshoot of the faith-based, Los Angeles-headquartered charity operation, the Dream Center. Last year DCEH paid $60 million to acquire the Art Institutes (Ai), Argosy University, and South University — chains of career colleges, with about 60,000 students across the country — from the troubled, collapsing, Pittsburgh-based for-profit college business Education Management Corporation (EDMC).

We reported, based on interviews with employees inside the DCEH operation, and a review of publicly available information, that there were serious questions about the new enterprise — questions about conflicts of interest and whether the now non-profit schools are being leveraged to create revenue for for-profit enterprises tied to DCEH CEO Brent Richardson, the former CEO of for-profit Grand Canyon University; questions about misrepresentations to students regarding the accreditation status of DCEH schools; questions about evasion of responsibilities to comply with federal regulations aimed at protecting vulnerable students.

Since we published, while DCEH employees and sketchy company defenders have debated my article online, I’ve spoken with six more employees from DCEH, Ai, and the cluster of connected for-profit operations — including the Steve Wozniak-branded coding camp Woz U, the Texas-based Southern Careers Institute (SCI), and Arizona-based Exeter Education — tied to DCEH and Richardson. These employees told me about questionable recruiting and financial aid practices, degradation of academic standards, and an ever-shifting explanation from management about the relationships of various Richardson-tied corporate entities.

The DCEH and Ai employees, who asked that I not identify them by name because of concerns about their careers, said that the ethics and integrity of the operation are worse than they were under EDMC. The Woz U employees said the ethics and integrity of that operation have also gotten worse since the various enterprises intertwined.

Once again, DCEH has not responded to requests to interview Brent Richardson or other executives about the issues raised in this article. SCI, the Dream Center, and Steve Wozniak also haven’t responded. Nor has the DeVos Department of Education.

The Art Institutes admissions manager

The Art Institutes have long been the flagship schools of the EDMC chain. With programs in animation, design, film and audio production, fashion, and culinary, Ai had a tradition of solid teaching and student success in many cases. But especially after the company went public in 1996 and then, in 2006, was taken over by Goldman Sachs and two private equity firms and expanded its online programs, its quality declined, prices rose, and predatory practices — such as making coercive recruiting pitches and admitting students unlikely to succeed in the programs — escalated.

A long-time Art Institutes admissions manager who contacted me said such bad behavior was now back in vogue under the new DECH management.

The admissions manager describes rapidly declining standards of integrity in the recruiting of new students, as DCEH executives pressure staff to sign up more students. The manager says that DCEH management has implemented a “stretch goal” for student “starts” of 10 percent above last year’s goals; but since the company reached only 80 percent of that goal, recruiters are actually being pushed to exceed last year’s results by some 30 percent. Some campus goals, the admissions manager reports, are for 50 and even 60 percent enrollment increases.

“They will not achieve this,” the admissions manager told me, “so we expect many to lose their jobs over not meeting goals. It’s back to numbers and only numbers.”

DCEH held a “summit” meeting for admissions staff leaders early this month in Phoenix. There, a top DCEH executive told staff that they absolutely needed to focus on numbers of new student applications, a stance, the admissions manager said, that represented “a complete change in the philosophy.” 

The admissions manager said that after EDMC and its industry faced embarrassing and costly disclosures about deceptive and unconscionable practices, and EDMC agreed to a $200 million settlement of federal and state law enforcement probes, “we went through years of rebuilding our culture.” According to this manager, as Obama administration oversight and state attorney general probes ramped up, EDMC had become “a company heavy on compliance. There was no room for error” and recruiters who engaged in unethical behavior “were terminated on the spot.”

Now, this manager says, “We’re going back into predatory practices” — back to the worst days of company practices ten years ago when Goldman Sachs bosses were pressing to increase starts and revenues.

“We seem to be changing our admissions standards,” the admissions manager says. Reps are instructed to push prospective students to the Art Institutes’ online enrollment app on their very first call, rather than giving them time and space to consider other schools. Reps are returning to the predatory practices of overcoming student objections instead of actually determining if the school is a good fit or discussing the program in detail.

As part of the push to enroll more students, faster, DCEH managers have discussed relaxing long-standing requirements that students sit for a personal interview before applying or that they include an essay with their application.

The reps are expected to secure four to five new student applications per week, according to the manager.

DCEH’s new senior vice president of enrollment is Monica Carson, who from 2004 to 2012 worked at Grand Canyon University, the giant for-profit school that Brent Richardson was then running. As our previous article described, many of the top staff at DCEH and in the constellation of for-profit companies around it previously worked with Richardson at Grand Canyon, or are relatives of Richardson. Among those at DCEH who formerly worked at Grand Canyon: John Crowley DCEH’s chief operating officer; Chris Richardson (Brent’s brother), general counsel; Shelley Gardner, senior vice president of student services (and married to Matt Gardner, who also works at DCEH and is Brent Richardson’s nephew); Mike Rasmussen, assistant vice president of enrollment operations; and Todd Prince, senior vice president, admissions.

In recent months, the company began limiting on-campus housing, where it was offered, to six months per student, apparently because the dorms are money losers, yet admissions reps were not telling students that their housing would only be short-term. Finally, last week, campuses informed students that it is ending campus housing this summer, a major hardship for the many students who enrolled in Ai in part because of the availability of housing.

The admissions reps, says this manager, now understand, “You need to conform or leave.” What will happen, the manager says, is that admissions supervisors “will scrap proper practices because otherwise they will lose their jobs.” As a result, “The student is not going to be the center; the number is going to be the center.” The change “is brutal for staff who care about the student.”

The admissions manager has observed the efforts of Brent Richardson and his chief operating officer and long-time associate John Crowley seeking to integrate the Art Institutes with the for-profit coding camp Woz U, of which Richardson is the board chair. Richardson and Crowley visiting various campuses — in Hollywood, Miami, and Arlington, Virginia, just outside Washington, DC — and talked about how Woz U admissions and instruction would be carried out inside Ai facilities.

Now, the admissions manager and others say, the Woz U-Ai convergence seems to be on hold. A DCEH employee tells me that Woz U materials were deliberately removed from Ai websites in recent days.

The admissions manager concluded by saying of DCEH, “They’re not an ethical company. There’s no question in my mind this is moving to a predatory college — driven by numbers — and no one is going to stand in their way.”

The Art Institutes academic manager

A long-time Art Institutes academic manager also reached out to me. This manager is typical of many Art Institute instructors with whom I’ve spoken over the years — proud of Ai programs and students but increasing dispirited by the declines in academic standards and resources, as pressure to increase revenues has increased.

As EDMC’s fortunes rapidly declined in recent years, this manager saw teachers get fired, pressured to sign meager severance agreements, and then escorted off campus. It was “brutal,” he says, with “no sense of humanity.” This manager says that he and many of his colleagues were hopeful that the philanthropy-based DCEH might empower and support the demoralized corps of Ai teachers. 

This manager was soon disappointed. His campus, he says, was directed to “cherry-pick the best data” to improve chances of impressing the school’s accreditor. DCEH also restricted the autonomy of Ai teachers.

Ai campuses were informed that their curricula would be supplemented with input from celebrity shoe entrepreneur Antonio Brown. A DCEH staff member told me that fast-tracking new offerings from a non-faculty member such as Brown can lead to problems with accreditors.  

Meanwhile, the Ai schools’ outdated technology and equipment gets older, and instructor compensation remains stagnant.

Confirming the account of the admissions manager with whom I spoke, the academic manager says his campus’s classrooms include many students who lack the preparation to succeed in the school’s courses. But given the decline in enrollments, the school “will take anybody.” The faculty is supposed to review admissions materials, he says, but “if we don’t accept, the [campus] president reverses. It’s open enrollment, but we’re not equipped for it. We don’t have the resources for unprepared students.”

He cited a current foreign student who is “absolutely delightful” but “doesn’t speak a word of English.” Overseas students, if they can afford Ai’s sky-high tuition, are particularly attractive because for-profit schools are required by law to obtain at least ten percent of their revenue from sources besides Department of Education grants and loans — and to date the Department has not given final approval to reclassify the DCEH schools as non-profit. 

The academic manager concluded that DCEH management has produced a “toxic environment” on his campus, with staff staying only because they need their jobs.

Woz U, Exeter, and SCI employees

As we noted in our previous article, Brent Richardson is not only the CEO of DCEH; he’s also, according to media reports, the chairman of the board of for-profit Woz U and the CEO of Arizona-based for-profit Exeter Education. Spokespersons for these entities, and their various press releases and web pages, have offered conflicting explanations as to whether and how these entities are connected, as well as about their connections to another Arizona-based bootcamp, Coder Camps, and to Southern Careers Institute, a for-profit chain that offers programs, at seven Texas campuses and online, in medical, business, beauty, automotive, and other fields.

The Arizona Republic has identified Brent Richardson as the Exeter CEO and the Woz U chairman. Yet according to same Republic article, Richardson told the paper that “Woz U doesn’t have a relationship with Exeter Education.”

It obviously does.

One Woz U employee and one Exeter employee reached out to me; they made clear that Woz U and Exeter were parts of the same operation. On the Woz U website, one can find a detailed “Exeter Education 2017-18 School Catalogue.”

Exeter/Woz U is also clearly tied to SCI.

An SCI employee pointed me to a video where Jacob Mayhew, SCI’s CEO, is introduced at an event as the CEO of Woz U.

Jacob Mayhew has been SCI’s CEO since May 2013, according to his LinkedIn profile. Before that he was for three years president, online, of Delta Career Education Corp. Before that he worked for four years as executive director of business development at Brent Richardson’s Grand Canyon University. (Mayhew is also chairman of Career Colleges & Schools of Texas, the trade association for for-profit colleges in that state.)

Matt Hawes, SCI’s chief operating officer, is a former director of enrollment at Grand Canyon. According to an SCI employee, Hawes has spent much of his time in recent months at Woz U’s office in Scottsdale, Arizona, where the coding school also has its only ground campus.

Southern Career Institute’s own performance indicators are far from stellar. In the most recent year with available data (2015-16), the school received 87.33 percent of its revenue from Department of Education student aid, perilously close to the 90-10 legal threshold. A New York Times analysis of college outcomes revealed that SCI students tend to fare poorly in terms of graduates’ earnings.

The Exeter employee and the Woz U employee both said that integrity and standards have declined since the predecessor of Woz U, called Coder Camps, was taken over by SCI and the Richardson operation.

A “Woz U Online Financial Aid Checklist” currently posted on the SCI website seems to tell Woz U students to complete a federal financial aid application and submit it to SCI. At the bottom of the checklist, it says, “Woz U Online is powered by Southern Careers Institute.”

Woz U is unaccredited and thus would not on its own be eligible for federal financial aid. The Exeter employee said that Woz U is “piggybacking off SCI for accreditation.” At least some of the students who sign up with Woz U recruiters are technically enrolled at SCI.

The Woz U employee says that the Coder Camps / Woz U instructors have been teaching online students who are getting financial aid.

The Woz U employee also tells me that if prospective students contact Woz U and can’t afford to pay for the tuition but are eligible for financial aid, a rep will refer them to SCI programs. Others are pushed to take out expensive private loans to pay for Woz U directly, according to the Exeter employee.

The Exeter employee says that Mayhew brashly told a room full of Woz U staff that if a student was refusing to pay back a loan, he would track down the student and try to take their house. The employee says the reps in the room were shocked by the comment. 

This employee says that, once Woz U merged with SCI, admissions standards were lowered.  

The combined Woz U / SCI operation, he said, has been making any adjustment needed to enroll new students and maximize revenues. 

The Woz U employee and the Exeter employee each described Mayhew as relentlessly focused on numbers. Mayhew told staff worried about admitted unqualified students: if they fail, they fail. The Woz U employee says the coder bootcamp has been “herding students like cattle and just trying to get everybody’s money.” The Exeter employee echoed that description: “They need butts in seats for class.”

The Woz U employee says the whole environment has been “really unethical there.” Recruiters have used coercive techniques common to for-profit colleges — for example, asking prospective students to imagine their children living in poverty unless they turned their lives around through the Woz U program. Some recruiters misrepresent to students what Woz U programs will teach them. 

The Exeter employee said such tactics had rendered the online division of Woz U “sketchy at best.”

The Woz U employee said that as recruiting tactics have become more predatory, the demographic of the coding school, especially for online students, has moved closer to that of predatory for-profit schools —  low-income, struggling for money, people of color, especially African-Americans.

There are gaps in the Woz U curriculum that make it harder for students to develop marketable skills, say the employees. One of them adds that, in his view, completion rates have gotten lower since Coder Camps became Woz U, especially in the school’s online division.

Much of the grading, according to the Exeter employee, is done by “mentors” — recent program graduates. As Woz U teachers started moving into SCI courses, mentors have been berated by supervisors when they give students a failing grade, because dropping out means an end to federal grants and loans for a student.

While the Exeter employee says that some students who have completed the Scottsdale ground campus course have gotten got jobs, results are much worse in the online division, and even most of the Woz U graduates who get tech jobs are not earning the kind of salaries that Woz U recruiters are promising.

The Exeter employee told me that Michael Clifford, Brent Richardson’s partner in taking over Grand Canyon in 2003, and a former Dream Center board member, has been a regular presence in the Woz U Scottsdale office. Clifford, with whom I’ve spoken at length in the past, engaged with me in a series of emails in the past few weeks but never answered my questions regarding his role in Richardson’s current operations.

The Exeter employee also said that Richardson and DCEH chief operating officer John Crowley, another Grand Canyon veteran, have mostly worked out of the DCEH office in Chandler, Arizona, but in recent weeks have been spending more time at the Woz U office in Scottsdale.

The Exeter-Woz U team was making plans to integrate Art Institutes enrollment into the menu of offerings to prospective students who contacted Woz U. But in recent days, Exeter/Woz U employees, like their Ai counterparts, got the message that the Woz U-Ai partnership has been halted for now.

An SCI staffer said that lately Jacob Mayhew does not seem to be calling himself the CEO of Woz U anymore, and that SCI seems to have moved away from offering Woz U programming on its campuses.

A few months ago, an SCI marketing vice president, Adrian De La Garza, directed SCI staff to remove Woz U and Coder Camps from their email signatures, so that messages would be “singularly brand focused.”

One person who hasn’t made that change is Susan Blanche, SCI’s VP of Human Resources. (She held the same title under Richardson at Grand Canyon.) On May 21 (five days after we posted our article), Blanche sent an email to staff, with a signature line showing the SCI, Woz U, and Exeter logos, in which she pledged to buy lunch for the SCI campus that posted the most reviews of the school on the company review website Glassdoor.com, a frequent site of employee complaints, including at for-profit colleges. As Blanche explained in her message, “We need to improve our profile on Glassdoor.” Numerous positive reviews of the company were posted in the next few days.

The Department of Education should be demanding answers about the shadowy mix of for-profit and non-profit, accredited and unaccredited, big promises and poor performance, brought forth by Brent Richardson and his minions. But everything Betsy DeVos has done so far in office suggests she’ll keep siding with wealthy, predatory operators, and turning her back on America’s students and taxpayers.

UPDATE 06-01-18: DCEH CEO Brent Richardson emailed staff this morning, saying that this article and my previous post appear to be “politically motivated,” but acknowledging “I held a prior equity stake in Woz U before the change in ownership between EDMC and DCEH. Currently, I serve on the senior management team at Woz U and in an advisory capacity at SCI.” Richardson added, “The trend in nonprofits (such as The Dream Center) expanding into education is a good change in that it allows DCEH to offer students accessible, affordable, relevant, and purposeful education. However, as with any large paradigm shift, it takes time to gain comfort in moving forward.”