GAO report on recruiting practices at for-profit colleges

Inside Higher Ed reports on the GAO (Government Accountability Office) investigation of the unethical, if not illegal recruiting practices at for-profit colleges. Read the GAO report (warning pdf): gaomarketing. Here’s an excerpt from the Inside Higher Ed article (the rest is here):

Undercover investigators posing as students found that employees at all 15 for-profit colleges visited for the investigations made “deceptive or otherwise questionable statements” to students about accreditation, graduation rates, employment outcomes, program costs or financial aid. At four institutions visited, admissions or financial aid officials encouraged students to submit fraudulent financial information in order to qualify for federal aid, the GAO says in its report. Though many similar tactics have been reported in the news media and recounted by former employees like Pruyn, the GAO report and video carry the weight and credibility of a Congressional investigation.

The investigators also submitted contact information for four prospective students with fictitious identities to “lead generation” websites that supply colleges with names of interested students, and encountered aggressive behavior, they said. Some students began receiving marketing calls from colleges within five minutes of submitting the information and, over the course of a month, one received more than 180 calls. Some came as late as 11 p.m.  In all, the four students received 436 calls in the span of a month. Of those that could be tracked, all but six came from for-profit institutions. The six that came from nonprofit institutions were all from the same public college, according to the GAO. More damning than aggressive calls are instances in which college employees encouraged prospective students to commit fraud, or conveyed incomplete or false information about the institution’s costs and student outcomes.

The New Poor: NY Times article on For-Profit Education

One fast-growing American industry has become a conspicuous beneficiary of the recession: for-profit colleges and trade schools. At institutions that train students for careers in areas like health care, computers and food service, enrollments are soaring as people anxious about weak job prospects borrow aggressively to pay tuition that can exceed $30,000 a year.

But the profits have come at substantial taxpayer expense while often delivering dubious benefits to students, according to academics and advocates for greater oversight of financial aid. Critics say many schools exaggerate the value of their degree programs, selling young people on dreams of middle-class wages while setting them up for default on untenable debts, low-wage work and a struggle to avoid poverty. And the schools are harvesting growing federal student aid dollars, including Pell grants awarded to low-income students.

“If these programs keep growing, you’re going to wind up with more and more students who are graduating and can’t find meaningful employment,” said Rafael I. Pardo, a professor at Seattle University School of Law and an expert on educational finance. “They can’t generate income needed to pay back their loans, and they’re going to end up in financial distress.”

For-profit trade schools have long drawn accusations that they overpromise and underdeliver, but the woeful economy has added to the industry’s opportunities along with the risks to students, according to education experts. They say these schools have exploited the recession as a lucrative recruiting device while tapping a larger pool of federal student aid.

Read the rest of the article here

Subprime Crisis of Student Debt

An interesting NY Times article, “Placing the Blame as Students are buried in Debt,” about student loans and financing education, given some of the recent discussions here as well as over at Ktistmatics:

So in an eerie echo of themortgage crisis, tens of thousands of people like Ms. Munna are facing a reckoning. They and their families made borrowing decisions based more on emotion than reason, much as subprime borrowers assumed the value of their houses would always go up.

Meanwhile, universities like N.Y.U. enrolled students without asking many questions about whether they could afford a $50,000 annual tuition bill. Then the colleges introduced the students to lenders who underwrote big loans without any idea of what the students might earn someday — just like the mortgage lenders who didn’t ask borrowers to verify their incomes.

Diploma Mills

Here’s an excerpt from an interesting interview with Barmak Nassarian, associate executive director for external relations and a lobbyist with the American Association of Collegiate Registrars and Admissions Officers (AACRAO), from Frontline’s “College, Inc.” program.  The section on loan defaults –also discussed in the Barron’s article I posted yesterday–is particularly revealing, I think.  In what follows, Nassarian is discussing quality and regulation.

Q: So we’re in the middle of a recession. Record demand for postsecondary education, am I right? And just the massive growth of for-profits. I mean, those would be the sort of saving features of what we’re seeing now.

Well, there’s one important additional dimension that makes all of that toxic, which I have a hard time communicating to people without being a little sort of colorful.

We live in a society that most transactions for goods and services involve the profit motive, and we’re used to that. There’s nothing wrong with it. But we’re also living in an advanced post-industrialist society where there are fundamental assumptions about consumer protection that we all walk around with. I walked into this room without examining the building, without any engineering drawings, on the assumptions that surely it was somebody’s job to make sure it’s not going to collapse on my head, despite the fact that it might have been built by a for-profit builder who might have had profit maximization as their primary incentive.

The Repo-Man Comes to Campus

I finally caught the latest Frontline program, “College Inc,” on PBS late last night (no need to troll your local PBS station though–you can watch it online here).  It certainly makes for some interesting viewing.  Here’s the summary from Frontline:

Even in lean times, the $400 billion business of higher education is booming. Nowhere is this more true than in one of the fastest-growing — and most controversial — sectors of the industry: for-profit colleges and universities that cater to non-traditional students, often confer degrees over the Internet, and, along the way, successfully capture billions of federal financial aid dollars.

In the meantime, have a look at this rather dispiriting article I found in Barron’s, “Leveraging Up to Learn” (below the fold).  Some of the links below are pdfs of charts/tables. The most important, in my view, is the one labeled “Giving It the Old College Try.”

High Tuition? Subsidize with Pornography!

This made me chuckle:

To Grove City College, John Gechter was a bright young student majoring in molecular biology. But to his online audience, he was Vincent DeSalvo, a baby-faced rising star in the gay pornography industry. Both worlds unexpectedly crashed into each other two weeks ago after his online persona was discovered at GCC.

…

GCC officials have decided to indefinitely suspend Gechter for one year for his activities, pending his decision to appeal to the provost. Gechter began his career in gay pornography late in his sophomore year, two years ago. During that time, Gechter successfully kept Vincent DeSalvo a secret from his life at GCC. No one knew about his off-campus job, not even his roommate at the Colonial Apartment complex.  That ended the night of April 23 when the first e-mail revealing his online identity was sent out. By the next morning, at least two-thirds of the student population had received the e-mail. So did school administration.

Read the whole article here, but one has to wonder if he was involved with hetero porn instead of gay porn the college would have made such a stink.  Still though, a bit of an institutional intrusion upon the student for off campus er..activities.

David Harvey On Financial Crisis in Red Pepper

David Harvey talks about the financial crisis in April/May issue of Red Pepper: 

What happened in the US was that eight men gave us a three-page document, which pointed a gun at everybody and said ‘give us $700 billion or else’. This to me was like a financial coup against the government and the population of the US. Which means you’re not going to come out of this crisis with a crisis of the capitalist class; you’re going to come out of this with a far greater consolidation of the capitalist class than there has been in the past. We’re going to end up with four or five major banking institutions in the United States and nothing else.

Read the whole thing.