Report Highlights Decline In Quality at Troubled Career Education Corp.
A new report from the research firm Capitol Forum documents evidence that educational quality has declined significantly in recent years at the colleges operated by for-profit Career Education Corporation (CEC). The report relies on statistical analysis and also interviews with former CEC employees.
When Todd Nelson became CEC’s CEO in 2015, the school already had been exposed as a bad actor, engaged in deceptive practices, by, among others, the Senate HELP committee’s landmark investigation of the for-profit college industry, and it faced a range of state and federal law enforcement probes.
But, apparently, Nelson has taken the company’s schools — American InterContinental University (AIU) and Colorado Technical University (CTU) — even lower.
One former Illinois-based American Intercontinental student advisor told Capitol Forum, “As soon as Todd Nelson came in… everything just went to a sales environment.” She explained, “People were fearful of their jobs and enrolling anyone they could enroll.”
A former Arizona-based advisor reports he was fired for answering a prospective student’s questions about educational loans; this advisor says the school used a coercive recruiting script that puts a “prospective student’s back up against the wall.”
He added: “It’s really a shitty place. Get them enrolled and funded. Most of these people have no business getting loans… Many of my enrollees—I estimate over 50 percent—dropped out during the very first class which is an introductory class.”
The new report comes as Nelson is bragging to Wall Street that “2018 was a watershed year for our company, with operating income the highest it has been in almost a decade” and “our balance sheet is expected to further improve in 2019…”
Betsy DeVos’s top two higher education aides, Diane Auer Jones and Robert Eitel — the people who have engineered DeVos’s disgraceful rollback of measures aimed at curbing for-profit college abuses — both were senior executives at Career Education Corp. until 2015.
Capitol Forum’s report presents data showing that while enrollment at CEC schools is increasing, dropout rates have risen sharply, as has bad debt.
A former AIU employee tells the outlet that John Kline, president of AIU believes “if you get a student on the phone, you should be able to convince them to go to school, start, and graduate.” But another former employee explained that some students were “woefully unprepared” to attend, especially for online programs; some students had no devices and some were even homeless. A former employee concludes, “a lot of these students have no idea what they’re getting themselves into.”
Meanwhile CEC spending on instruction has declined, with CEC schools spending about 8.8 percent of their budgets on teaching in 2017, compared with the 29 percent average at four-year for-profit schools.
Capitol Forum does a good job of summing up the career of CEO Nelson:
The Todd Nelson playbook at Career Education Corporation is reminiscent of the strategies that Nelson implemented as CEO of University of Phoenix and, after that, as CEO of Education Management Corporation (EDMC). University of Phoenix was plagued by government investigations and litigation shortly after Nelson resigned as CEO in 2006.
EDMC ended up in bankruptcy following Nelson’s tenure as CEO from 2007 to 2013. EDMC, like University of Phoenix, was plagued by government investigations and litigation following Nelson’s departure as CEO.
In August, CEC agreed to pay $30 million to settle charges brought by the Federal Trade Commission that CEC schools recruit students through deceptive third-party lead generation operations. Former employees confirm to Capitol Forum that CEC often does get its leads from these shady operators.
In January, CEC reached a $494 million settlement with 49 state attorneys general over alleged deceptive practices. In 2013, CEC agreed to pay $10.25 million to resolve New York’s claims that the company, in its student recruiting and reporting to overseers, exaggerated its graduates’ job placement rates. In 2010, CEC agreed to pay $40 million to settle a class action lawsuit brought by students who said its San Francisco-based California Culinary Academy had misled them by claiming that 97 percent of graduates were hired for culinary jobs.
These law enforcement probes and lawsuits reflect decades of deceptive and abusive behavior by CEC against students and taxpayers. Law enforcement agencies deserve credit for pursuing CEC and demanding the company agree to halt some deceptive practices. But the financial penalties equals a tiny percentage of the billions — as much as $1.9 billion in a single year — that CEC has raked in from taxpayers over decades.
Capitol Forum also addresses CEC’s acquisition this year, for around $40 million, of another for-profit school, Trident University. Nelson told investors in April that Trident, which specializes in graduate degrees for military-affiliated students, was attractive because it is experienced in generating its own leads, has low default rates, and is accredited by regional accreditor WASC. Given Nelson’s record, though, Capitol Forum is right to ask whether the addition of Trident to CEC will make CEC better or make Trident worse.
UPDATE: A reminder that Bill Hansen, former deputy secretary of education under George W. Bush, currently head of the troubling non-profit Strada Education Network, a close associate of former Trump/DeVos higher education aide (now lobbyist) James Manning, and the father of another former Trump/DeVos aide, has served for the past two years on the board of directors of Career Education Corp.