November 4, 2020

DeVos Department Has Ended Federal Aid to Troubled For-Profit College Chain

DeVos Department Has Ended Federal Aid to Troubled For-Profit College Chain

Betsy DeVos’s four-year effort to do the bidding of predatory for-profit colleges and trash rules to hold them accountable has had mixed results. Some awful schools seem to be thriving, while others have continued to collapse under the weight of their own bad behavior. 

The next casualty may be an East Coast operation — including Harris School of Business and other career colleges — that was recently acquired by a firm called Trigram Education Partners LLC. The school chain has a long record of predatory abuses and, as you will see below, the principals of Trigram, Jon Coover and Stanford Silverman, have their own troubling pasts. 

New research confirms that nationwide enrollment at for-profit colleges has increased during the COVID-19 pandemic, while enrollment at other kinds of schools has declined. The reasons are clear, and concerning: The economic collapse has motivated people to go back to school, and while many campus-based colleges are struggling to adapt to the pandemic, for-profits are increasingly online-only, and they specialize in deceptive, aggressive advertising and recruiting that, unfortunately, often works, especially in hard economic times. Worse, many for-profit schools remain poor value, — high prices, low quality — leaving many former students deep in debt and without the career advancement they sought. 

Donald Trump and Betsy DeVos have completely reversed all the measures implemented during the Obama years to hold predatory colleges accountable and steer federal aid to better quality schools. As a result, some bad-behaving predatory colleges — such as American Intercontinental University and Colorado Technical University, operated by Perdoceo, where Betsy DeVos’s top two higher education aides previously workedcontinue to make big money off student and taxpayers. Now, the pandemic is giving these kinds of schools more opportunities to scam students, many of them low-income Americans, veterans, single parents, immigrants, and others struggling to build a better future. 

At the same time, however, increased public awareness of for-profit college abuses, and enforcement efforts by the Federal Trade Commission, state attorneys general, state oversight agencies, and advocates for students have continued to put pressure on bad schools and helped shut down more of the worst offenders, including Vatterott College and multiple chains owned by Dream Center Education Holdings and Education Corporation of America.

Unfortunately, the way that such greedy, selfish for-profit colleges have closed, suddenly, with students left out in the cold, has compounded the hardship for students, as well as the costs for taxpayers. And DeVos has aggressively rejected or ignored the tens of thousands of applications by ripped-off former students to asserts their legal rights to have their loan debts cancelled.

Now the Trigram-owned schools are the latest operation in peril. 

Trouble with the government and accreditors

According to letters from accreditors ACCET and ACCSC, posted on the accreditor websites, the U.S. Department of Education, by notice dated August 14, 2020, to Trigram, cut off Title IV federal student grants and loans for Trigram’s Harris School of Business, Branford Hall Career Institute, and Orlando-based American College for Medical Careers, effective June 26, 2020. Despite the overwhelming favoritism demonstrated by DeVos and her aides for for-profit colleges, career officials at the Department sometimes step up and do their jobs, and this Department action may be an example of that. (I asked the Department of Education press office for a copy of its notice withdrawing aid, or other correspondence on the Trigram schools, and the office responded, unhelpfully, that I should file a Freedom of Information Act request.)  Trigram is apparently seeking re-instatement of the aid from the Department.

Subsequently, on October 12, ACCET informed the Trigram schools it monitors that it would withdraw accreditation, an action that Trigram apparently also is appealing. Meanwhile on October 8 ACCSC told Trigram it was requiring teach-out agreements — plans in the event schools close — for the campuses it oversees, giving Trigram until December 1 to respond. 

The accreditor letters allege that Trigram failed to inform the Department of Education that the schools had changed owners, or to secure a required $6.5 million letter of credit to ensure funds for students and creditors in the event of collapse, or to pay its staff. Trigram has told the accreditors it is working on getting the letter of credit, but ACCET apparently has run out of patience. 

Harris School instructors and employees have told a Maryland/Delaware area TV news outlet that they aren’t getting paid. They say paycheck delays began this summer, after Trigram moved to acquire the school. ACCET also received complaints from a landlord that Harris has failed to pay rent for at least one campus. 

Harris’s website recently included a notice to students that the schools had “decided to extend the Fall Break” for campuses in Delaware, Pennsylvania, New Jersey, and Maine until November 2. New notices posted on the Harris and Branford school websites this week now say campuses won’t re-open until November 16.

It’s not at all clear how Harris School of Business could continue to operate without the federal student grants and loans the Department of Education has now cut off. The most recent year of data available on the school from the Department of Education, 2015-16, shows that Harris was receiving 89.71 percent of its total revenue from federal aid — just at the 90 percent ceiling permitted by federal law.

Trigram’s perilous status with the Department and accreditors is not readily apparent from the websites of Harris, Branford Hall, or American College for Medical Careers, all of which seem to be open for new student enrollments. Trigram has apparently notified at least some Harris students that ACCSC placed the school on warning due to the change in ownership, as the accreditor required; according to the notice, which I found online, the warning status is “standard procedure… usual and customary practice” and “will have no effect on your enrollment and is not directly related to your campus.” The notice from Trigram makes no mention of the cutoff of federal aid. 

Trouble under Premier Education Group

The reputation of these schools under the prior owner, privately-held Premier Education Group, was disturbing. At its peak, Harris School of Business was getting more than $110 million a year in taxpayer dollars, and Premier Education Group ran schools with about 17,000 students across 10 states.

Former employees sued Premier under the Federal False Claims whistleblower law in 2011, alleging that Harris regularly misled students about the value of its programs, and signed up even students who had little chance of benefiting, such as a student with an electronic ankle bracelet training to be a pharmacy technician, when certification for that job generally excludes people with felony or drug convictions. The suit, which was the subject of a 2014 front-page New York Times article, claimed that Harris made false reports to the government about its students in order to keep eligibility for federal student aid. Premier settled the case in 2019, paying $3.4 million while admitting no wrongdoing.

Premier’s seeming contempt for the law was illustrated by the Harris school’s failure to comply during the Obama years with consumer disclosure provisions of the federal gainful employment rule; under that rule, now repealed by DeVos, Harris was required to inform students on its website about graduation rates, tuition costs, job placement statistics, and student debt loads. Even though the non-profit group The Institute for College Access and Success repeatedly brought Harris’s failure to comply to the attention of the U.S. Department of Education, Harris for years failed to post the required disclosures on its site.

In 2015, the U.S. Department of Education closed an investigation of the Harris school, with a letter declaring that the department had found “serious concerns” regarding the school but “made a decision to close the review based on the length of time that has passed since the examination of those records, and Harris’ assertion that it has taken corrective actions.” Issues with Harris recounted by the Department included failure to document student eligibility for financial aid, failure to offer hours of instruction as promised in the school catalogue, inadequate monitoring of student attendance, and alleged misrepresentations, namely failing to tell students that Harris lacked the necessary accreditation to make its medical assisting programs graduates eligible to take a key licensing examination. 

A 2014 lawsuit brought by the Massachusetts attorney general alleged that another Premier-operated school, Salter College, made false representations to students regarding the selectivity of its admissions and job placement rates. To resolve the case, Premier paid students $3.75 million and later provided $1.6 million in debt relief and agreed to close its only two Salter campuses, both in Massachusetts, one at the former location of a strip club

Another accreditor, ACICS, withdrew accreditation from one of Premier’s Branford Hall campuses, in Connecticut, in 2017.

A 2019 investigation by The Hechinger Report and NBC News found deceptive recruiting, high prices, and poor student outcomes at Premier-operated schools including Harris and Salter.

But no matter how bad the records and reputations of these kinds of career schools get, so long as these schools are eligible for federal financial aid, they can recruit unsuspecting students, many the first in their family to go to college, and sign them up and cash millions or billions in taxpayer-funded grants and loans. So Harris and the Premier schools apparently remained an attractive acquisition for Trigram Education Partners.

The Trouble with Trigram

The principals of Trigram, the company that bought Harris and the other schools from Premiere this year, also have concerning issues in their pasts.

Trigram’s CEO, South Dakotan Jon Coover, 82, is also a principal at Minerva Capital Management, a New York City-based company focused on investing in for-profit higher education. Stanford Silverman, the founder and CEO of Minerva, is also an officer of Trigram. Most of the Minerva team has experience working for for-profit colleges.

According to this bio on the Minerva website, Coover “has a reputation for successfully turning around school groups, jump starting performance and meeting plan expectations underpinned with the basic principles that effectively help to change people’s lives.”

But that’s not the only reputation Coover has.  

Coover was, according to his LinkedIn bio, from 1995 to 2004 a senior executive of Career Education Corporation, now called Perdoceo, the same predatory college company — with a terrible record of deceiving and abusing students — that has thrived under DeVos and her aides who also once worked there. 

In 2006, amid a dispute with a dissident shareholder who cited information allegedly provided by Coover, Career Education Corporation sent a letter describing Coover as “a disgruntled former CEC employee who was terminated for cause by the company in 2004.” 

In 2012, the Federal Trade Commission penalized what it called a “scam” run by an operation called Government Careers Inc., of which Coover was the CEO. According to the FTC, “consumers … allegedly were deceived by false promises that they could get federal jobs if they paid for study materials or counseling services to help them pass an exam, even though often there were no exams or jobs.” Under a settlement, Coover and two other individuals were “permanently banned from selling employment-related products or services.” The FTC referred to Coover’s operation and others pursuing similar scams as “Con Artists Who Target Jobless Americans.” 

In August 2020, Minerva, Coover, and Silverman were sued in federal court in Atlanta for racketeering, fraud, theft, and other charges by a company called Interactive Learning Systems. The lawsuit alleges the defendants engaged in a deceptive scheme to gain knowledge and control of Interactive’s English language teaching program and divert money from Interactive’s coffers. According to the court docket, Coover and his co-defendants have obtained an extension of time to file an answer to the complaint. (The plaintiff’s lawyer is former congressman Bob Barr (R-GA).) 

Silverman, Minerva’s CEO, has recently written passionately, and at length, attacking the FBI investigation of Donald Trump’s 2016 campaign and the Justice Department’s 2011 unsuccessful prosecution on stock manipulation charges of a Silverman associate named Michael Lauer. Silverman’s outrage at the criminal justice system could possibly be connected to the fact that in 1993 he pled guilty to a felony charge of participating, as the president of Devotion, an advertising agency, in a criminal conspiracy to conceal political campaign contributions from his client, Orange and Rockland Utilities, to candidates for office. 

Also, there’s even more to Jon Coover. It turns out he previously worked at Premier Education Group before his company, Trigram, acquired Harris and the other schools this year. Court records show that Coover sued Premier in Massachusetts in 2016 for age discrimination in employment. He alleged that Premier hired him for an executive position in 2010 but then in 2015 demoted him and then fired him and accused him of misconduct. The case was settled in 2017. 

Now it looks like Coover’s attempt to come back and take over the school chain may be a bust.

Jon Coover and Stanford Silverman did not respond to requests for comment. 

UPDATE 11-06-20: I have learned from an industry source that Jon Coover died on November 5, 2020, the day after we posted this article. Condolences to his family and friends; I am sorry about the timing here.

FURTHER UPDATE: Obituary.