Department of Education Deepens Probe of Perdoceo
USA Today over the weekend reported that it had obtained an internal U.S. Department of Education email indicating that the Department, in December, requested information from for-profit college company Perdoceo, which runs American Intercontinental University (AIU) and Colorado Technical University (CTU). The Department also asked Perdoceo (which was known until 2020 as Career Education Corp.) to retain records regarding student recruiting, marketing, financial aid practices, and more.
As USA Today explained, such a request “points to a pending investigation.”
The USA Today article also provided a detailed account of abuses at the company from a former CTU recruiter, Aidan Peters, who worked out of Perdoceo’s Schaumburg, Illinois, offices. The article quoted from a 44-page sworn declaration that Peters prepared with the assistance of his lawyer and then shared with the education department and other law enforcement agencies.
In the declaration, Peters writes about CTU enrolling students who had no high school diploma or GED, or who lacked the computers needed for online study, or who could barely read and write — and thus students who were not eligible for, or would not benefit from, the programs. Peters talks about Perdoceo supervisors pressuring recruiters to enroll students “by any means necessary,” including relentless phone calls, deceptive information, and emotional manipulation.
“I left,” Peters writes, “because I could no longer participate in defrauding students, which is exactly what CTU required of us. I could not be a part of any more lies or omissions to students to get them to enroll.”
Over the past two years, I’ve had detailed conversions with Peters and a dozen or so other recent CTU and AIU employees. (Many of the AIU staffers were based in Chandler, Arizona.) I included their accounts — with their names then withheld at their requests out of concern for their careers — in several articles on this website.
Together these recent employees provide a powerful indictment of Perdoceo and its consistent misconduct: deceptive recruiting, financial aid abuse, and more. The evidence is strong that Perdoceo schools have been using a business model like that of Corinthian, ITT Tech, CEHE, and other for-profit college chains that were forced out of business for illegal behavior, for deceiving students and driving them deep into debt, without the career advancement they sought.
Many of these recent Perdoceo employees subsequently have spoken with federal investigators.
It is encouraging that the Department of Education has now requested information from Perdoceo about its practices. it’s also hopeful that the Department is in the process of enhancing its capacity to investigate and crack down on abuses and violations.
But these measures won’t amount to much without meaningful results. If the Biden administration is to keep its repeated promises to enforce the law and protect students, it must act promptly against the predatory Perdoceo schools, before Perdoceo grabs billions more in taxpayer money and ruins the financial futures of thousands more people.
Aidan Peters — and the other former Perdoceo employees who have spoken up — deserve enormous credit for their integrity and courage; their exposure of Perdoceo’s abuses could make a huge difference in halting the company’s wrongdoing, and perhaps deterring other waste, fraud, and abuse in the for-profit college industry.
If USA Today‘s report about the Department sending an information request to Perdoceo is correct, by the way, it’s surprising that Perdoceo, a publicly-traded company, has not notified investors through a public filing with the Securities and Exchange Commission; that seems like the kind of information that the SEC disclosure laws contemplate.
But who knows what’s going on in the mind of Perdoceo head Todd Nelson, whose previous tenures at the helms of for-profit giants University of Phoenix and EDMC were marked by predatory practices and law enforcement troubles? Perdoceo announced two weeks ago that Nelson has just relinquished the company’s CEO job to become the full-time executive chairman, handing the CEO reins to long-time lieutenant Andrew Hurst.
Did Nelson see the writing on the wall that, finally, Perdoceo’s days are numbered, and that it was time to leave management of the company’s demise to an underling, and find his next hustle? Or was it the Perdoceo board of directors that forced a change? And will the Department of Education and law enforcement agencies ever start doing more to hold personally accountable executives like Nelson for the destruction they’ve left in their wakes?
UPDATE 02-24-22 6:00 pm: Perdoceo’s new quarterly SEC filing includes this passage, reporting but appearing to minimize the significance of the Department of Education’s December information request:
… the Department [of Education] has broad powers to request information and review records of an institution participating in Title IV Programs. These requests do not necessarily relate to any specific allegations of wrong-doing or even assert any compliance failures of any kind. We received such a request in December 2021….
More than one person who listened to the Perdoceo earnings call that just ended made a connection between the Department’s probe and other law enforcement concerns, reported “marketing adjustments” made by the company (“adjustments to our marketing strategies to further improve our focus on identifying prospective students who are more likely to succeed at one of our universities”), a reported steep decline in enrollments, and Todd Nelson stepping down as CEO. In other words, it’s possible Perdoceo is feeling pressure from government overseers to reduce its predatory behavior, and that means it is not able to enroll as many new students, but predatory practices are kinda what Todd Nelson does.