April 11, 2023

Education Department Will Terminate Aid to Florida Career College

Education Department Will Terminate Aid to Florida Career College

The U.S. Department of Education announced today it will stop providing federal student grant and loan payments to Florida Career College (FCC), a for-profit school whose predatory practices Republic Report helped expose in a May 2020 investigation.

The Department explained on its website that it was acting against the school after an investigation “found that FCC broke federal rules. Among other things, FCC broke rules around the ability-to-benefit test taken by some students without a high school diploma. We found that FCC broke those rules to increase its enrollment, regardless of whether students would actually benefit from its programs.”

In a press release, Rich Cordray, head of the Department’s Office of Federal Student Aid (FSA), said, “Federal Student Aid is holding Florida Career College accountable for taking advantage of some of the most vulnerable students.”

Ability-to-benefit (ATB) is a Department of Education program that allows students without a high school diploma or GED to enroll in some college-level programs and receive federal aid, provided they pass an entrance exam. Among other revelations in our 2020 article, based on accounts by numerous former FCC employees, we reported that FCC repeatedly enrolled high school dropouts who couldn’t pass ATB tests without the school helping them cheat, which, according to multiple employees, FCC did on a regular basis.

One former FCC admissions staff member told me that the FCC ATB testing process, using Wonderlic exams, “is highly compromised… I’ve seen countless students who speak very little English pass this test via doctored test scores by … proctors,” i.e. staff engaged to monitor the test-taking.  Another former staffer described the ATB testing at FCC as “corrupt as hell” — the school used paper testing, the employee said, because it’s easier to falsify; school officials coach the students during exams; and proctors change answers. A third employee claimed that management had a quota — 90% of applicants had to pass the ATB exam.

FCC paid the proctors, who are licensed by the state of Florida, large fees for their efforts. A fourth employee said that a corporate trainer told proctors to instruct students to answer the questions they knew and leave the rest blank, so that proctors could more easily fill in the missing answers. A proctor who refused was terminated. One FCC education manager who expressed concerns about the enrollment, and suspicious entrance exam successes, of non-English speakers was also soon fired.

The Department’s press release today outlines its own investigation’s findings regarding FCC’s ATB violations:

FSA found that proctors administering ATB tests for FCC routinely broke the rules governing test administration, including by filling in or changing answers after students finished their tests, helping students during testing or taking tests for them, and permitting students to use calculators in violation of testing rules. FSA also found that FCC employees and employees of its parent company, International Education Corporation (IEC), knew about and encouraged violations of the ATB testing process to affect test outcomes. For example, FCC and IEC senior leaders tracked proctor pass rates and sought to replace proctors with low pass rates, and they picked the supposedly “independent” proctors they wanted to administer ATB tests at FCC campuses. FCC and IEC officials also pressured proctors to pass students and otherwise inappropriately inserted themselves into ATB test administration and proctor training in order to increase passage rates and subsequent enrollments.

FCC enrolled a significant portion of its students through the ATB testing process. Since 2018, between 43% and 48% of FCC students enrolled at the school through ATB testing. Furthermore, FCC and another school owned by IEC accounted for nearly 75% of all ATB enrollments nationwide during the 2021-22 award year.

FCC’s pervasive violations of the rules and regulations governing the ATB testing process harmed students. In ATB testing, it is equally important to identify applicants who do not have the ability to benefit from academic training as it is to identify those who do. From 2016 to 2021, more than 50% of ATB students withdrew from FCC without completing their 10-month certificate program. Additionally, from award year 2018–19 through award year 2021–22, more than 80% of ATB students who withdrew from FCC still incurred debt or exhausted their Federal Pell Grant eligibility or both.

The action against FCC is the most significant effort by far by the Biden administration to formally deny recertification for federal student aid. It is, also, likely the most important such effort since the Department at the end of the Obama administration cut off Globe University/Minnesota School of Business, in the wake of a court judgment finding that school had violated Minnesota consumer protection laws, and four other schools. (Other major career college operations, including Corinthian, ITT Tech, and CEHE shut down not after formal termination but instead after the Department imposed tight conditions on continued aid or the school lost accreditation.)

The Biden administration has now taken a step in the right direction on enforcement, though progress has been too slow given the continued operation of predatory schools, including the Perdoceo schools and Ashford University / UAGC. I’m hopeful that under the strong enforcement and investigations teams assembled by Cordray, the Department will accelerate its efforts, and that their commitment to accountability will create deterrence and compel other bad schools to clean up their acts or else surrender their eligibility for federal aid.

Also, it’s disappointing that the Department didn’t today highlight the evidence of racial discrimination at the school, evidence assembled in a lawsuit brought by former FCC students. But at least the Department finally has acted to remove this long-time abuser school from the federal aid program.

And it’s significant that the Department has taken care to remove FCC in a manner sensitive to the practical realities of current FCC students. The Department says it has given FCC the option to delay the end of its participation in the federal student aid program until September 30, if it agrees to certain conditions, including that it not enroll any new students using federal aid, that it develop a “teach-out” plan for students who might want to transfer schools, that it submit monthly reports, and that it provide a $6 million letter of credit. If FCC refuses the conditions, it will be removed from federal aid on April 30. The Department gave FCC until next Tuesday to decide. This approach would give some students the option of finishing their degrees at FCC, unless the school chooses to shut them out.

The Department website provides FCC students with details on other options, which include having their federal loan obligations cancelled.

Florida Career College since 2014 has been owned by International Education Corporation (IEC), a privately-held company which also runs the chains UEI College, United Education Institute, U.S Colleges, and Sage Truck Driving Schools. IEC’s CEO is Fardad Fateri, who was previously Chief Academic Officer at the notorious for-profit Corinthian Colleges chain and before that a senior executive at another troubling for-profit, DeVry University.

FCC has ten campuses in Florida and two in Houston, Texas. The school has been offering short-term programs in business, health care, IT, cosmetology, and HVAC repair. In the most recent reported year, 2020-21, FCC received $99.1 million in student aid from the U.S. Department of Education, accounting for 87 percent of its total revenue, and got even more taxpayer money from the U.S. Department of Veterans Affairs to enroll student veterans. The school was awarded another $17.3 million in emergency federal aid under the 2020 COVID-19 relief bill. The school had approximately 11,000 students enrolled as of 2021.

In April 2020, FCC was sued by former students for targeting Black people for programs that buried students in debt. The students are represented by lawyers at the non-profit Project on Predatory Student Lending. (The case was stymied when FCC’s expensive lawyers convinced the presiding judge to enforce a “mandatory arbitration” clause prohibiting students from pursuing their claims in court; the Biden administration has issued new rules prohibiting schools getting federal aid from enforcing such provisions, and the students have filed an appeal.)

After I wrote about the filing of the lawsuit, numerous former and current employees told me the school has engaged in deceptive and fraudulent practices and would, as one put it, “enroll anyone with a pulse” to get federal aid dollars. Another ex-employee called Florida Career College “the most corrupt institution I have ever seen in my life.”

“Once the student is in class,” another former employee told me, “they can’t keep up with college level education and most fail out… Leaving thousands [of dollars] in debt and nothing to show for it.”

Our 2020 articles focused on FCC’s Orlando campus. According to former employees there, FCC’s recruiters found homeless people in strip mall parking lots and lured them to campus by giving them hot dogs. They tricked others into campus visits by claiming they were offering job interviews.

The former employees told me FCC admitted students whose physical and intellectual disabilities prevented them from doing the jobs they trained for, including a student whom the school enrolled in a dental assisting program even though she was legally blind and couldn’t adequately see inside patients’ mouths. The school also enrolled students whose convictions for violent crimes made them ineligible for positions they sought; and students who didn’t speak English, even though the programs were only in English.

Some of the former employees who spoke with me subsequently spoke with Department of Education investigators.

Last July, the Department of Education placed FCC on Heightened Cash Monitoring 2 (HCM2), a restrictive status under which a school must request reimbursements from the Department for student financial aid, rather than getting payments in advance.

Since June 2021, FCC has been on “Notification of Apparent Deficiency” status with its accreditor, the Council on Occupational Education (COE). COE has provided this explanation for placing FCC on this status: “Non-compliance with conditions, standards, and/or criteria of the Commission.” In 2020, after I published my first report on FCC, COE’s executive director, Gary Puckett, told me the agency was investigating issues at the school. In October 2021, the U.S. Department of Education informed COE that it had one year to improve its own compliance with Department regulations, including that COE “must demonstrate that it has meaningfully engaged with its obligations … to enforce its accreditation standards with respect to complaints of fraud and criminal activity at Florida Career College.”

Depositions and declarations filed in 2021 in the students’ lawsuit, including from some of the same former FCC employees who spoke with me, revealed more abuses at the school, such as: FCC recruiters have cold called people who may have been looking on job training websites and have never expressed interest in attending the school; FCC invited some prospective students for “job interviews” when the real intent was to enroll them in the school; and prospective students who did not want to enroll were pressured into talking with at least three FCC representatives before they could leave campus. FCC’s Jacksonville admissions director, according to one former employee, would pressure black students to enroll, but would provide white students recommendations for other options.

A former FCC loan collections officer declared in a case filing that: FCC’s financial aid process during enrollment was rushed, and a high percentage of FCC students did not understand the debt they were taking on; FCC collections staff were paid bonuses based on how much they collected from students; the purpose of FCC’s high-pressure collections process was to help FCC meet its legal obligation to maintain at least 10 percent of its revenue from sources other than federal aid; and FCC faculty falsified class attendance records, vouching for students who were not actually there.

UPDATE 04-12-23 6:00 am:

A spokesperson for FCC, Joe Cockrell, provided a statement that was reported in Higher Ed Dive and Inside Higher Ed: “We are deeply disappointed in the Department of Education’s myopic and misguided decision. The DOE risks harming thousands of students seeking economic stability and a better life. For more than 40 years, our singular focus has been quality career training programs that meet or exceed all state and Federal regulations so that people can find a good job in their chosen career path. We intend to fight this unjust and inequitable decision vigorously on behalf of our students and the communities we serve.”

UPDATE 04-14-23 4:00 pm:

Republic Report has obtained the two letters sent by the Department of Education on April 11 to Fardad Fateri, CEO of FCC’s parent company International Education Corp. — one detailing the findings of the investigation and reasons for denial of recertification the other offering conditions that FCC must meet to continue receiving federal aid through September 30.

Among other revelations, the investigative letter documents: that one FCC exams proctor testified that 90 to 95 percent of prospective students flunked the Wonderlic ATB exam on the first try, after which proctor-assisted cheating would begin; that this proctor was fired when she stopped changing test answers to allow students to pass; that another proctor reported changing answers on the ATB exams as recently as summer 2022, more than two years after we published our article and FCC’s accreditor, Council on Occupational Education (COE), citing our article, issued FCC a warning notice; that this proctor was pressured by FCC to pass eight out of ten students and was offered $5 to $20 for each student passed; and that proctors would complete entire ATB tests for students.

The letter also recounts testimony from multiple admissions personnel that IEC and FCC leadership “imposed extreme pressure on FCC staff to meet enrollment and start metrics,” including threatening to fire admissions staff if they did not meet targets.

The investigations letter also references that the Department’s probe “uncovered evidence of other non-compliant conduct, including falsification of attendance records and misrepresentations to FCC’s accrediting agency about its job placement rates.”

Over 30 witnesses told the Department that attendance records were doctored, according to the letter.  A Houston FCC employee drove around until he found a student at a swimming pool and handed him a laptop to log in for attendance, even though the student did not attend class. An Orlando employee did the same for a student found at a McDonalds. In many other cases, instructors themselves would falsely sign students in to class. Numerous students told the Department they did not attend classes for which, FCC records showed, they were present.

An employee reported that FCC director of admissions Michael Re and IEC chief operating officer Shoukry Tiab were behind the pressure to keep students enrolled. An email from a former FCC Orlando campus president to FCC corporate leadership alleged that Re encouraged falsifying attendance records.

Other FCC employees charged with verifying to accreditor COE that FCC graduates had obtained jobs in their fields said they were overruled by managers when they rejected alleged placements as invalid. One went to an address where a graduate had supposedly been hired and found an empty field with a for sale sign. Sometimes FCC would pressure unemployed students to sign waivers saying they were not seeking jobs.

Then there is evidence of a cover-up. Four former employees told the Department they were coached on what to say to the Department investigators as the investigation went forward, including being told to deny that recruiters had enrollment quotas, which was false. Another employee says she was told to stay out of sight when Department investigators came for a visit so she would not be interviewed.

FCC/IEC, according to the letter, responded to the Department’s charges about ATB testing by blaming a third-party testing contractor that provided the proctors. But the letter rejects that defense, citing evidence that senior IEC executives tracked each proctor’s pass rates and suggested which ones needed to be replaced.

There’s also a paragraph in the letter noting that Republic Report‘s original expose on FCC gave company leaders notice of ATB abuses at the school — evidence that those executives had knowledge that abuses were occurring.

Education Department Will Terminate Aid to Florida Career College

The evidence of violations detailed in the letter is strong, and the offenses are serious. There have been numerous criminal prosecutions for for-profit college fraud, and I wonder if the education and justice departments are looking at that.

Florida Career College, by the way, was a member of the for-profit college industry’s main lobbying group, CECU, at least until April 2021, when CECU stopped posting its member list online, as the Internet Archive Wayback Machine has preserved:

Education Department Will Terminate Aid to Florida Career College

CECU’s affiliation with FCC reaffirms that then-CECU CEO Steve Gunderson was ignoring the truth when he said in 2019, “Once again, schools that are not members of CECU are abruptly closing causing untold, and unacceptable damage to their students. In doing so, these schools just disappear. But all the multi-generation family-owned schools in our sector are left with a bad reputation created by somebody else.” In fact, CECU has consistently harbored predatory colleges, including publicly-traded schools, private equity-owned schools, multi-generation family-owned schools, and schools converted to non-profit status on dubious terms.

UPDATE 04-22-23:

The Department of Education has reported on its website:

On April 18, 2023, Florida Career College (FCC) accepted the U.S. Department of Education’s conditions to delay the end of the school’s federal student aid program participation. At the request of FCC, we agreed to delay the end of FCC’s participation until Jan. 31, 2024, to allow time for more current students to complete at FCC if they want to. FCC is not allowed to enroll new students using federal student financial aid.

On April 19, we requested the final ED-FCC agreement from the Department, and we will post it when we receive it.