Collaboration in Civic Spheres

Public Data Ferret On KOMO 1000: U.S. Senate Testimony On Fraud At For-Profit Colleges

by August 12th, 2010

A federal investigative report on fraud at for-profit colleges plus related U.S. Senate testimony from an industry insider and a financial expert were at the center of my regular weekly segment today on the work of our Public Data Ferret project, at KOMO-AM 1000 News Radio in Seattle. Here’s the original Ferret write-up, as well as the audio of the segment. The transcript follows.

Brian Calvert: “1.8 million students headed back to a non-traditional classroom this fall. Matt Rosenberg of on the line with us, and Matt, we’re referring in this instance to for-profit colleges. What are some of the names that would be familiar if we’re talking about non-profit institutions?”

Matt Rosenberg: “Well, University of Phoenix, Art Institute Of Seattle, Everest University, Argosy University, Kaplan University, to name a few.”

Nancy Barrick: “Alright. These are for-profit colleges. You looked into a report where several of these schools have been investigated. What are they looking at?”

Matt Rosenberg: “Senate testimony last week has shined a glaring spotlight on ethically and financially troubling practices by the big national corporations and other stake-holders that run these for-profit colleges. There was an investigation by the Government Accountability Office plus reports to the Senate from an industry insider – a recruiter who worked in the boiler room – and a financial expert. And what they told the Senate is disturbing. The picture is this: high pressure sales tactics, price gouging, rocketing default rates on the federal loans to students at these for-profit colleges, plus deceptive marketing. Prices are lowballed, accreditation is fudged, and the credits often don’t transfer to other schools or aren’t accepted by employers. So, the emerging picture is that the issues are systemic, not isolated.”

Nancy Barrick: “And Matt, this involves for the most part, the loans, right, the federal loans that the students get?”

Matt Rosenberg: “Indeed. And the financial expert that testified to Congress drew, in his mind, he said, disturbing parallels between what’s happening here and the sub-prime mortgage meltdown. The idea here is everyone should have a college loan. You know, if my cat Shasta right here showed up with a GED clutched between her little paws, she’d probably get a student loan and get enrolled. And the pressure is to keep passing the students through, even if they’re not cutting it. There are no admissions standards, the admissions tests are essentially fake, and the money keeps coming so long as the students are enrolled. Another thing that’s interesting, guys, is that while no Washington state institutions, for-profits, were named in this report, these issues have surfaced here, and last May four employees of a shut-down college for profit in Tacoma were indicted in federal court for bilking the federal government out of $65,000 in student loans, and just in July, instructors at the Art Institute of Seattle – whose parent company is 38 percent owned by Goldman Sachs, I should add – protested publicly that students were rushed through their classes even if they were failing, that management said, ‘pass em, pass ’em,’ and that they were being urged to take out federal loans that they could not afford to repay.”

Brian Calvert: “So Matt, are you getting the sense that Congress is looking at these for-profit schools a little bit deeper, thinking that they may not be offering the education that they should, because on the other side of that, you get supporters of these schools, and graduates of these particular schools that may argue that they indeed got a good education and had a good overall experience.”

Matt Rosenberg: “Well, it is important to bring some balance to this issue, that’s very true, Brian. I think that standards need to be tightened, especially on the loans. But if you look at the online reviews – which we took pains to include links to at our post about all of this at Public Data Ferret – there are mixed reviews. And there are people, these are folks who are more focused from the start, who say they got a good education that put them on their way to a good career path. And the other side of this, too, is that employers want employees with skills. And these institutions can provide good training. But I think the real consumer safeguards that prospective students need to look at are:

resist high pressure sales tactics;

have an actual plan for your education;

and then, reverse engineer it, guys, I think that’s the biggest thing. So if you’re going to enroll in one of these schools and get a degree in computer graphics, or cosmetology, or business management, go talk to employers first and see if they’ll recognize the certificate or associate’s degree, and then also go talk to other four-year colleges if you’re thinking of transferring later, and see if the credits will transfer. A lot of students have been unpleasantly surprised on these counts.”

Nancy Barrick: “Good advice there, Matt. If you want to check out Matt’s Web site, and more details, go to KOMO, search Nine To Noon.”

2 Responses to “Public Data Ferret On KOMO 1000: U.S. Senate Testimony On Fraud At For-Profit Colleges”

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