April 27, 2023

Data Shows U.S. Aid to Perdoceo Schools Hurts Students and Taxpayers

Data Shows U.S. Aid to Perdoceo Schools Hurts Students and Taxpayers

New data released by the U.S. Department of Education show that the two schools operated by for-profit Perdoceo Education Corp. — American Intercontinental University (AIU) and Colorado Technical University (CTU), both entirely online — continue to deliver poor results for students, with low graduation rates and graduate incomes and high levels of student debt.

Coming in the wake of federal and state law enforcement actions against Perdoceo’s schools, and evidence of continuing deceptive practices, the new signs of dismal student outcomes call into further question the wisdom of the U.S. Department of Education providing hundreds of millions annually — more than $570 million in the most recent year reported — to AIU and CTU.

The new data, added to the to Department’s College Scorecard website on Tuesday, covers a wide range of colleges and universities for the 2020-21 academic year. 

As to Perdoceo’s American Intercontinental University, which offers associates, bachelors, and masters degrees in fields including business, IT, health care, and criminal justice, the Department’s data shows:

— Only 19% of students graduate within eight years of their start date, compared to the national average of 58%; only 24% return after their first year;

— The average cost per year for students is $13,722, 73% of the national average of $18,902 (which includes schools with more costly to provide in-person instruction);

— Median earnings of $36,578 is 73% of the national average of $50,391, with only 50% making more than someone with only a high school diploma six years after graduation;

— 74% of students take on federal student loans, with a median debt for graduates of $31,000 and a typical monthly payment of $329, with repayment status two years into repayment obligation breaking down as follows: 33% forbearance (not paying), 25% not making progress (not paying), 18% default (not paying), 11% deferment (not paying), 7% delinquent (not paying), 3% making progress, 2% discharged (no longer obligated to pay), and 1% paid in full. 

Data for Perdoceo’s Colorado Technical, which has associates, bachelors, masters, and doctoral degrees in similar fields, is similarly troubling:

— 22% graduation rate; 46% of students return after first year;
— Average annual cost $17,576;
— Median earnings $35,791; 52% making more than a high school graduate 6 years after entering school;
— 76% receive federal student loans; median debt for graduates $29,832; typical monthly payment $316;
— Loan status after two years: 32% forbearance, 25% not making progress, 18% defaulted, 10% deferment, 7% delinquent, 5% making progress, 2% discharged, 1% paid in full.

Previously released Department of Education data shows that for the 2020-21 school year, American Intercontinental received about $251 million, around 86 percent of its total revenues, from U.S. taxpayers through student grants and loans from the Department of Education. An unspecified additional chunk of its revenue also came from taxpayers, through student aid from the U.S. departments of defense and veterans affairs. Meanwhile, Colorado Technical got around $320 million, some 82 percent of revenues, from the education department, plus additional Pentagon and VA aid.

Perdoceo (previously called Career Education Corp.) has recently faced major law enforcement actions for predatory conduct. In 2019, the company entered into a $494 million settlement with 48 state attorneys general, plus the District of Columbia, over allegations that the company engaged in widespread deceptive practices against students. Later that same year, Perdoceo 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.

Recent Perdoceo employees have told media outlets USA Today and Capitol Forum, as well as Republic Report, that company recruiters continue to feel pressure to make misleading sales pitches and to enroll low-income people into programs that aren’t strong enough to help them succeed.

Some of those former employees also have spoken with federal investigators.

USA Today reported last year that the Department of Education, in December 2021, requested information from Perdoceo; the Department also asked Perdoceo to retain records regarding student recruiting, marketing, financial aid practices, and more. Perdoceo confirmed the probe, while seeming to minimize its significance, in a February 2022 SEC filing. Perdoceo also acknowledged in May 2022 that it received a request for CTU documents and information from the U.S. Justice Department.

Joe Biden promised, on his 2020 campaign website, that if the American people elected him, his administration would “require for-profits to first prove their value to the U.S. Department of Education before gaining eligibility for federal aid.” With all the evidence of deceptive practices and other wrongdoing, and with such awful outcomes for students, why does the U.S. Department of Education continue to send taxpayer dollars — and U.S. students — to the for-profit Perdoceo schools?