March 9, 2021

Ex-Democratic Congressman Joins Board of For-Profit College That Preys On Low-Income Students

Ex-Democratic Congressman Joins Board of For-Profit College That Preys On Low-Income Students

Perdoceo Education Corp., operator of for-profit colleges that have repeatedly faced law enforcement actions for deceiving and abusing low-income students, announced today that Alan Wheat, a former Democratic congressman representing Missouri, has joined the company’s board of directors. Wheat, a senior policy advisor in the DC office of the law firm Polsinelli, will receive $80,000 per year for his service on the Perdoceo board. Wheat served twelve years in the U.S. House of Representatives, leaving in 1995 after an unsuccessful run for a U.S. senate seat.

In January 2019, Perdoceo, then called Career Education Corp., agreed to a $494 million settlement with 48 state attorneys general, plus the District of Columbia. The AGs alleged that the company engaged in widespread deceptive practices against students.

In August 2019, the company agreed to pay $30 million to settle charges brought by the Federal Trade Commission that its schools have recruited students through deceptive third-party lead generation operations. Some lead generation websites deceptively promise jobs, food stampsveterans information, and other things low-income people need, especially in the COVID-19 climate, but in reality are run mostly to sell these leads to for-profit colleges.

Back in 2013, the company also agreed to pay $10.25 million to resolve the New York attorney general’s separate claims that the company, in its student recruiting and reporting to overseers, exaggerated its graduates’ job placement rates.

Perdoceo in recent years not only changed its name but also shut down its old, troubled school chains — Sanford-Brown, Briarcliffe, Harrington, Brooks, Gibbs, Le Cordon Bleu. It now runs two big online schools, American Intercontinental University (AIU) and Colorado Technical Institute (CTU).

Seven current or recently-departed AIU and CTU recruiters have reached out to me in the past year, one as recently as this month, and they have made clear that the abuses at the company are ongoing. They have recounted in detail how their supervisors relentlessly pressure them to push people into low-quality college programs — often pitting recruiters against each other in a struggle to keep their jobs. Those who previously worked for other for-profit colleges said Perdoceo is far worse in terms of deceptive and coercive recruiting tactics.

The recruiters say the students tend to be single mothers, veterans, people of color, low income people, immigrants, elderly people. They say many have no experience with college, and indeed that often the people on the phone say they weren’t even looking for college programs, but instead provided their information online seeking jobs — suggesting Perdoceo still benefits from a disgraceful bait and switch tactic frequently employed by predatory schools.

The Perdoceo schools, recruiters say, are even enrolling people who have previously defaulted on student loans, hoping they can fix their default issues and then backdate the findings.

Many students drop out after 10 weeks, by which time Perdoceo has banked a semester’s worth of federal aid, and the students are on the hook for huge federal loans they can’t afford to repay.

“I am lying to students,” one AIU employee told me, because in order to graduate, “they are going to need more than they are allowed to borrow.” And they will end up with crushing debt. “It is huge disservice,” the employee said, “to put them in programs not only will they be in debt but will be not successful.”

Bachelors degree programs at AIU and CTU can cost in excess of $60,000, even $75,000. According to Department of Education data, American Intercontinental University’s graduation rate for first-time, full-time online students is just 28 percent, with starting salaries for graduates ranging from $18,000 to $43,000. For Colorado Tech, the graduation rate is 25 percent, with salaries ranging from $23,000 to $72,000.

Perdoceo CEO Todd Nelson received $7.5 million in total compensation from he company in 2019. Perdoceo had revenues of about $687 million in 2020. About 85 percent of those revenues came from federal student aid provided by U.S. taxpayers.

Perdoceo is also the company where Trump education secretary Betsy DeVos’s two top higher education aides — Diane Auer Jones and Robert Eitel — previously worked as senior executives. With Trump gone, and Democrats in charge of the White House and Congress, the for-profit college industry is hiring Democrats to help keep federal dollars flowing and accountability at a minimum. The industry has over the years paid a wide range of influential Washingtonians for this purpose. That might explain why Perdoceo has signed up Alan Wheat.  Why Wheat would validate this predatory company is another question. I reached out to him for comment and will update if he responds.