Nice Day To Be Shorting K-12 Inc

From Ed Week:

The stock of online provider K12 Inc. took a steep plunge this week following its release of information showing more modest projections for revenue and student enrollment than analysts had anticipated.

In a statement released this week, the company estimated its average enrollment for the schools it manages at 128,000 students for the quarter, which was up nearly 6 percent from the first quarter of the previous year, yet "below management's expectations."

The Herndon, Va.-based company also said it expected revenues for the full fiscal year to range from $905 million to $925 million, and its operating income to fall between $53 million to $57 million, numbers that disappointed analysts.

The measure of Wall Street's dim view of K12's recent showing was reflected in the company's stock price, which plummeted from more than $29 a share to about $19 a share in the day following the release of its numbers. As of mid-afternoon today, the price was hovering above $18. (K12's stock took a comparable plunge in late 2011 following a wave of criticism directed at the company, before recovering.)

Whitney Tilson said a little while back that K-12 Inc was his largest short position.

Education Nation Should Invite Carrianne Howard To Talk About How Wonderful Lloyd Blankfein's Art Institutes Are

Raging Horse does an excellent job of pointing out who NBC should have invited for their corporate education reform-slanted Education Nation propaganda-fest this year.

Alas, NBC isn't much interested in having anybody on that stage who won't carry water for the corporate education reform agenda, so they only invited deformers like Michael Bloomberg, Jeb Bush, Joel Klein, Michelle Rhee, et al. to this year's Education Nation.

Even Diane Ravitch was only invited to sit in the audience, an outrageous insult to not only Ravitch but to every teacher in this country who has been slammed and smeared by corporate reforms like Klein, Rhee, et al.

But of all the corporate education reform-friendly guests NBC did invite, I find Goldman Sachs CEO Lloyd Blankfein the most outrageous.

You see, Goldman Sachs, in addition to being the most evil corporate entity on the planet, owns 41% of the parent company of the notorious for-profit swindle college, the Art Institutes.

Bloomberg News published a devastating expose of the Art Institutes and Goldman Sachs back in 2010 that found degrees from the Art Institutes essentially worthless, debt levels incurred by students at the schools extremely high.

They use the story of Carrianne Howard, a young woman who graduated from the Art Institute of Fort Lauderdale and now makes her living as a stripper, to show just what a scam the school is (that's Howard pictured above, with her Art Institute diploma):

Carrianne Howard dreamed of designing video games, so she enrolled in a program at the Art Institute of Fort Lauderdale, a for-profit college part-owned by Goldman Sachs Group Inc. Her bachelor’s degree in game art and design cost $70,000 in tuition and fees. After she graduated in December 2007, she found a job that paid $12 an hour recruiting employees for video game companies. She lost that job a year later when her department was shuttered.

These days, Howard, 26, makes her living in a way that doesn’t require a college diploma: by stripping at the Lido Cabaret, a topless club in Cocoa Beach, Florida. “I didn’t know what else to do,” she says. “I’ve got a worthless degree. It’s like I didn’t attend school at all.”

...

Carrianne Howard, the Florida student, didn’t borrow for her education. Instead her parents paid roughly $70,000 in tuition bills. Her mother, an airline data analyst, and her father, a computer engineer, sold their California home and moved to Virginia after her father lost his job and her mother retired. They used money from the sale to pay for tuition, and her parents are now struggling financially, Howard and her mother say.

Howard grew up in Valencia, California, a suburb of Los Angeles, and became drawn to video gaming during high school. One afternoon in 2004, an Art Institute ad popped up on her PC.

“I was as excited as can be,” she says. “I thought it was a dream come true.”

She and her mother toured the Fort Lauderdale campus, a bright, modern three-story building flanked by reflecting pools and palm trees. Her tour guide “just made it sound really exciting and a lot of fun, like I was going to make hundreds of thousands of dollars,” Howard says.

EDMC schools train representatives to make “no promise, implication, or guarantee” about employment, Muller says.

A couple of years into her studies, Howard says she grew disenchanted. Some classes consisted largely of playing video games, she says. She wanted to drop out but her mother insisted she finish because the family had spent so much already. She graduated in December 2007; in March 2009 she lost her first job, at GameRecruiter, a Fort Lauderdale-based gaming industry employment agency where she was making $12 an hour. Marc Mencher, GameRecruiter’s president and CEO, says she was let go only because he closed down her entire department, and calls her “an exceptional performer.”

She may be struggling to find work in part because of inadequate preparation from the Art Institute’s gaming department, Mencher says.

“It’s a weak program because it’s understaffed,” says Mencher, who serves on the Art Institute’s national advisory board for gaming programs. “I personally feel the students aren’t getting their money’s worth.”

After Bloomberg Businessweek asked EDMC for comment, Mencher sent a follow-up e-mail, saying that although the Art Institute is “not perfect and they have issues like any organization,” it is “an excellent program built on input from respected industry professionals along with local employers.” It has an “outstanding placement” record for graduates, he said.
Lido Cabaret

Howard applied for dozens of jobs, not only in gaming but also in grocery stores and nursing homes, mostly for minimum wage, she says. In October 2009, Howard turned to adult entertainment by doing paid Web chats. In March she started dancing at Lido Cabaret, earning $400 to $1,000 a week, she says.

She now hopes to save enough to go back to college and get a business degree. As she considers returning to school, Howard also helps run an anti-Art Institute website, where she has collected more than 70 names in a petition to send to the U.S. Education Dept.

The private, nonprofit Florida Institute of Technology, where Howard would like to enroll, won’t accept any of her credits from EDMC, according to spokeswoman Karen Rhine, because the Art Institute doesn’t have the kind of accreditation the traditional college requires. In its school catalog and other documents, the Art Institute “does not imply or guarantee” that credits will transfer to other universities, says EDMC’s Muller.

At 1 a.m. on a recent weeknight, Howard finished a shift at Lido. “This is what I do,” she says. “When I’m in here, I try not to think about the Art Institute.”

NBC ought to add Carrianne Howard or any of the other students who graduated from Art Institutes with a worthless degree and tens of thousands in debt to talk up the school.

But instead they invite banker criminal Blankfein instead.

In the past, they have had the CEO and head criminal of the University of Phoenix at Education Nation.

This year, the executive VP from Apollo Group, the owner of the University of Phoenix, will be there.

So every year, NBC doesn't miss a trick to not only invite every corporate deformer they can think of to sell the corporate deform agenda, but there's always a for-profit college criminal shill on the panel as well.

But no Diane Ravitch, no Anthony Cody, no Karen Lewis, no Susan Ohanian, no Lois Weiner, no actual working teachers who don't carry the ed deform message

And no students from one of these for-profit scam schools like Art Institutes or University of Phoenix to tell the audience how much debt they carry as they work at Starbucks or Applebees or, like Carrianne Howard, a strip club.

NBC's Education Nation ought to come with a scammer alert on the bottom of the screen.

The entire "symposium" is nothing but propaganda for the corporate education deform movement and for the criminal for-profit school industry.

It's Come To This

Sad:

SOUTH BEND, Ind. (AP) — Struggling Indiana public school districts are buying billboard space, airing radio ads and even sending principals door-to-door.

It's an unusual marketing campaign aimed at persuading parents not to move their children to private schools as the nation's largest voucher program doubles in size.

The promotional efforts are an attempt to prevent the kind of student exodus that administrators have long feared might result from allowing students to attend private school using public money. If a large number of families abandon their local districts, millions of dollars could be drained from the state's public education system.

The Indiana voucher program is the biggest test yet of an idea sought for years by conservative Republicans. They say it offers families more choices and gives public schools a greater incentive to improve.

And of course the money that used to go to into the public school system will now go to the edu-entrepreneurs and the for-profits.

That's what education reform has always been about.

Squeezing labor costs, chopping off whole segments of the system and making them for-profit, garnering tax breaks for their "philanthropy" and making money hand over fist.

We're getting pretty close to the end game when a public school system has to take out ads begging parents to not abandon it.

Joel Klein's New Business Is Full Of Crooks

Joel Klein has moved into the K12 online for profit education business now that he's working for News Corp.

Leaving aside the conflict of interest generated by Murdoch's buying an online for profit education company that does business with the NYCDOE and has been promoted by Chancellor Klein as the future of education (indeed, his biggest regret as chancellor was NOT doing more business with this company) right after Klein joined Murdoch's company, one wonders how well the for profits do at educating people.

The Education Trust found they do not do well at all, though the for profit companies themselves do quite well:

A new report on graduation rates at for-profit colleges by a nonprofit research and advocacy group charges that such colleges deliver “little more than crippling debt,” citing federal data that suggests only 9 percent of the first-time, full-time bachelor’s degree students at the University of Phoenix, the nation’s largest for-profit college, graduate within six years.

The report, “Subprime Opportunity,” by the Education Trust, found that in 2008, only 22 percent of the first-time, full-time bachelor’s degree students at for-profit colleges over all graduate within six years, compared with 55 percent at public institutions and 65 percent at private nonprofit colleges.

Among Phoenix’s online students, only 5 percent graduated within six years, and at the campuses in Cleveland and Wichita, Kan., only 4 percent graduated within six years.

“For-profits proudly claim to be models of access in higher education because they willingly open their doors to disadvantaged, underprepared students.” said José L. Cruz, a vice president for the trust. “But we must ask the question, ‘Access to what?’ ”

Since the first-time, full-time students tracked in the federal statistics are the most likely to graduate, the report said, these figures may actually overstate the graduation rates.

...

The report acknowledges that for students seeking associate degrees, for-profit colleges’ three-year graduation rate of 60 percent is considerably higher than the 22 percent rate at public community colleges.

There is still cause for concern, the report said, because for-profit students graduate with so much more debt than community college students. Many either default on their loans, or struggle to make payments but find that their lives are taken over by debt.

In a separate study also released Tuesday, the Pew Research Center reported that almost one-quarter of those who received bachelor’s degrees at for-profit schools in 2008 borrowed more than $40,000, compared with 5 percent at public institutions and 14 percent at not-for-profit colleges. Over all, the Pew report found that students who earned a bachelor’s degree in 2008 borrowed 50 percent more, in inflation-adjusted dollars, than those who graduated in 1996. Those who earned an associate degree or certificate in 2008 borrowed more than twice as much as their 1996 counterparts.

The Education Trust is financed partly by the Bill and Melinda Gates Foundation. This month, Melinda Gates resigned from the board of the Washington Post Company, which gets most of its revenues from its for-profit higher-education unit, Kaplan Inc.

When Bill and Melinda Gates are even running away from the scandal of for profit education companies, you know they're bad.

But Joel Klein isn't running away from them at all.

He's running toward them to cash in his years at the DOE.

Frankly, the Murdoch purchase of the for profit online education company - Wireless Generation - that has done so much business with the DOE and was purchased just two weeks after Klein joined Murdoch's company, needs to be investigated.

Dunno if this is a job for John Liu or for Bill De Blasio, but somebody needs to take a real good look at this business deal Murdoch engineered, see what part Klein played in it, and if wrongdoing is found, expose it to the city and country at large.

And then charges should be filed and let's see if we can't throw Klein's crooked ass in jail.

Melinda Gates Steps Down From Washington Post/Kaplan University Board

I guess the NY Times expose on the fraud that is the Washington Post/Kaplan company got to Ms. Gates.

Here is how the Washington Post covered her resignation:

Melinda French Gates, philanthropist and wife of billionaire Microsoft co-founder Bill Gates, has resigned from the Washington Post Co. board of directors, the company announced Friday.

Gates, a former Microsoft manager who runs the multibillion-dollar Bill and Melinda Gates Foundation with her husband, had joined the board in 2004.

She did not give a reason for stepping down. A family spokesman said she was spending more time than before working and traveling for the foundation.

The Post board's chairman, Donald E. Graham, said it is "sad at losing her."

The Post's Kaplan education unit has come under harsh scrutiny in news reports quoting former Kaplan employees who said that they had been instructed to use the Gates name to persuade students to take classes at the company.

Gates said in a statement released by The Post that she has "been impressed with The Washington Post Company's work with Kaplan, whose new approaches to education are allowing students opportunities that would otherwise not be possible."

She also said the "mission" of The Post "remains as vital today as at any time in its history."

Gates and her husband are close to Warren E. Buffett, whose Berkshire Hathaway company owns about 24 percent of the Post Co. Buffett has pledged to donate much of his fortune to the Gates Foundation.

The Post's board, which includes Buffett, now has 11 members.

It's a shame Gates wasn't honest about the reason she was stepping down.

It doesn't take a genius to see that the Times expose was the reason.

She could have done the education reform movement some good by actually criticizing the Post/Kaplan Company for their fraudulent activities stealing money from students and taxpayers.

But to be honest, it would probably be difficult for Gates to do that.

The nexus between for-profit education companies and the education reform movement has never been more apparent than when Chancellor Klein jumped ship at the NYCDOE to head up Rupert Murdoch's new online for-profit education company this week.

Geoffrey Canada at the Harlem Children's Zone has his own connections to for-profit education companies, having taken $25 million in cash payments from Goldman Sachs, part owner the Art Institutes.

There is a lot of money to be made from the suckers out there and people like Gates, Klein, Canada, Buffet, et al. all know that.

That's why they don't do anything about the kind of fraudulent activity that the Post/Kaplan Company engages in.

In fact, not only don't they do anything about the fraudulent activity, they're not even willing to publicly criticize it.

But I guess it's hard to do that when they're making money off of it themselves.

Rudy Crew On Cathie Black

He says being NYC schools chancellor is more than managing assets:

We’re in danger of making the New York City public schools a plaything for the rich and famous. Perhaps the thinking is that directing schools is something you do when you’re finished doing your real job; an avocation that starts with a love of learning and warm remembrances of being in school yourself.

I do not ascribe bad motivations to Mayor Bloomberg or his new appointee, Cathie Black, but their thinking is flawed if they honestly believe running a large urban school district is solely a matter of managing time, money, and people. The production cycle of a third-grader learning the skills of reading comprehension is quite different from that of a magazine. What's needed are skillful relationships between a teacher, a student, and a family. Every child, every day needs that relationship. And to characterize that relationship as something which anybody in business can produce without having the slightest hint of technical understanding and skill is an insult to the very children, parents, and communities now in her care.

It would be wrong to assume that Ms. Black cannot lead. In fact, her resume speaks highly of her leadership skills as a business woman. But we’re not talking about leading a business. We’re talking about an organization whose mission, practice, structure, and day-to-day tactics come from disciplines far from this candidate’s apparent experience and knowledge set.

I assume that we will hear words of empathy and caring about children over the course of the next several weeks, as well as many recitations of her extraordinary career in business. But caring is not enough, business profitability is not enough, and being up for a new challenge is not enough.

Unless Ms. Black can do more than manage the “assets,” she is likely to be a leader with few followers among the ranks of principals and teachers. And unless she can move the conversation from her and the Mayor’s ideology to the needs of children, parents and communities, then she and the Mayor will have played a cruel hoax on New Yorkers. And in so doing they will have lessened the value of public schools and marginalized this enterprise. Leading the nation’s largest school district goes well beyond just managing people or selling an agenda.

I agree with all of that except for the part about not ascribing bad motivations to Mayor Bloomberg.

To the contrary, his motivation is to destroy the public school system, break the teachers union and charterize every public school in the city so that he and his Upper East Side cronies can make boatloads of money in the edu-entrepreneur business.

Kinda the way Joel Klein went straight from his public sector job of starving schools of resources, closing schools, and opening charters to replace those closed schools to News Corp where he will head up Murdoch's new for-profit education business.

It's all connected and the motivations behind the "reform" movement are very, very bad indeed.

I Write To Jay Matthews

Had to write to my favorite education blowhard at the Kaplan University Post, Jay Matthews, about the Times expose on the Washington Post/Kaplan University:

Mr. Matthews,

As an education writer, does it give you pause knowing you work for a company that runs its colleges the way Bernie Madoff ran his financial funds?

If even a tenth of the allegations in the Times article on Kaplan are true, every employee at the Post ought to be ashamed to work there.

But the people working the education beat, and particularly the writers who pontificate about education reform as you do, ought to resign in disgrace.

And frankly, the people running Kaplan and the Post, particularly Mr. Graham, belong in jail.

*****************
Teacher of English

PS: Here's my favorite Kaplan/Post recruiting practice:

"Many current and former Kaplan employees and students — including those, like Mr. Wratten, not involved in the lawsuits — said in interviews that they believed the company was concerned most with getting students’ financial aid, and that Kaplan’s fast-growing revenues were based on recruiting students whose chances of succeeding were low.

They cite, for example, a training manual used by recruiters in Pittsburgh whose “profile” of Kaplan students listed markers like low self-esteem, reliance on public assistance, being fired, laid off, incarcerated, or physically or mentally abused."

Just horrific.

These people really do belong in jail.

No wonder Joel Klein went to go work the for-profit education beat for Rupert Murdoch.

There's so much evil to be done there.

UPDATE: Matthews responds:

I share yr concerns about what the investigations have revealed, but I am very familiar with the morale and ethical standards of the people that run the Washington Post company, and am quite certain they are going to make sure that any of this nonsense that is still going on will be stopped. Every company has problems with employees, sometimes whole divisions, going in the wrong direction. The important thing is what they do about it. So let me know what you think a year from now. ---jay

I write back:

Mr. Matthews,

I teach English to seniors. I have long been aware of problems in the for-profit sector when a few of my former students who had attended for-profits - including the Art Institute, Laboratory Institute of Merchandising, Kaplan and Devry - were deeply in debt and had either dropped out of school or were holding worthless diplomas and were unemployed or working minimum wage jobs. Having seen Kaplan sign up special education students who graduated with IEP diplomas and load them up with $10,000-$15,000 in loans, then drop them without any intervention when the students couldn't do the work, I don't want to hear about your confidence that Graham and the Post company will take care of this mess. Graham and the Post company have had plenty of time to take care of this mess, having been aware of these problems for years according to the Times article. The only thing that matters to the Post company is profit - quarterly profit.

If Graham and the Post company want to do the right thing, they should come clean about the fraud, shut down these schools, and hand back all the money they stole from students and taxpayers.

No response from Matthews so far.

Kaplan Crooks

The Washington Post is owned by Kaplan Test Prep.

Kaplan Test Prep is a for-profit education management organization that runs standardized test preparation programs and undergraduate and graduate programs both online and at traditional campuses.

Kaplan Test Prep, like many for-profit education management organizations, is run by crooks.

Don't believe me?

Officials from the Government Accountability Office conducted an investigation of 15 for-profit schools around the country, including two owned by Kaplan, and found “fraud and engagement in deceptive or otherwise questionable behavior" at all the schools.

Specifically here is what investigators found at one Kaplan campus in Florida:

At one college, later identified in congressional testimony as Kaplan College's Pembroke Pines campus, the investigation identified two scenarios where prospective students, who were working undercover for the GAO, were faced with “fraud and engagement in deceptive or otherwise questionable behavior” when inquiring about an associate degree in criminal justice.

In the first scenario reported by the GAO:

* The Kaplan admissions representative falsely stated that the college was accredited by the same agency that accredits Harvard University and the University of Florida.
* A test proctor sat in the room while the applicant took a test and coached her through it.
* The applicant was not allowed to speak to a financial aid representative until after she enrolled.
* The applicant had to sign an agreement to pay $50 a month to the college while enrolled.
* The admissions representative said the applicant should switch from criminal justice to the medical assistant certificate because she could make up to $68,000 a year. But, the GAO said 90 percent of medical assistants make less than $40,000 a year.
* When asked about paying back student loans, the Kaplan representative allegedly told the applicant: “You gotta look at it … I owe $85,000 to the University of Florida. Will I pay it back? Probably not …. I look at life as tomorrow’s never promised …. Education is an investment, you’re going to get paid back tenfold, no matter what.”

In the second scenario, the GAO red-flagged these tactics:

* Two Kaplan representatives refused to answer the applicant’s questions about financial aid, but they debated with him about his commitment level for 30 minutes.
* After first saying the criminal justice program would take 18 months to complete, the representative changed that to two years. The representative then said that student loans would fully cover the program’s cost. Yet, the GAO noted that the applicant would need to take out both federal student loans and private loans to finish the program in less than three years.
* The representative told the applicant that repaying the student loans would not be an issue once he got his new job.
* “Hard sell” marketing techniques were used, such as becoming argumentative, calling the applicant afraid and scolding the applicant for not wanting to take out loans.

The full GAO report can be read here, but the above highlights, showing that Kaplan college employees are no better than sleazy car salesmen looking to make a bottom line sale no matter what and willing to lie, cheat, and berate customers to sign on the dotted line (as they say in Glengarry Glen Ross, "ALWAYS BE CLOSING!!!"), get the point across quite well.

Kaplan, with more than 66,000 students around the U.S., received $211 million in Pell grants during the 2009-2010 school year.

Add in the amount of student loan money Kaplan hands out to students (for-profit colleges received $20 billion in student loans last year) and you realize that there is an awful lot of money the people running these schools are stealing from both students and taxpayers.

And they are stealing it. The USDOE released data last week showing that for-profit colleges have disturbingly low repayment rates for the student loans - especially at Kaplan schools:

Adding new fuel to the growing controversy over regulating for-profit colleges, the Department of Education on Friday released data on student-loan repayment rates at the nation’s colleges and universities, listing the institutions by name.

Although the department issued no analysis or comparison of repayment rates by sector, outside advocacy groups that analyzed the data found that in 2009, repayment rates were 54 percent at public colleges and universities, 56 percent at private nonprofit institutions, and 36 percent at for-profit colleges.

“I think it’s notable that the for-profits are the only type of school where the majority of students are unable to repay their loans,” said Debbie Frankle Cochrane, program director at the Institute for College Access and Success, which has called for tighter regulation of for-profit institutions.

At some for-profit colleges, the repayment rates were startlingly low. For example, 33 of the 86 Corinthian Colleges’ Everest locations had repayment rates of less than 20 percent — and at several, the rates were less than 10 percent.

At the headquarters of the University of Phoenix, the nation’s largest for-profit education company, the repayment rate was 44 percent, compared with 38 percent at DeVry and 27 percent at Kaplan University, a unit of the Washington Post Company.

So Kaplan schools have been caught engaging in fraudulent and "deceptive or otherwise questionable behavior" by government investigators and government data shows that only 27% of Kaplan students can afford to pay back their loans.

They are lying to and manipulating vulnerable people to get them to sign up for classes, then don't care whether people can actually pay back the loans they take out to attend their schools.

Here is how one former admissions officer at Kaplan University described the school and how they "rip off" students in 2007:

I was a Financial Aid Officer at Kaplan University which is owned by the Washington Post(1). My employment was for over a year and I quit to work at a new job. I am not angry at Kaplan yet I am disappointed. The school offers a very expensive education, aggressive enrollment process and a questionable quality of education. They don't seem motivated to educate. They are motivated to make money.

The cost of tuition goes up every year. The price hike usually takes place toward the middle of the year. I believe it is currently 305 a credit hour. This means a 90 credit associate degree costs 27,450 plus fees. A 180 credit bachelors degree costs 54,900. The equivalent ONLINE bachelors degree at the University of Florida is 18,240 plus fees.(1) There are more reputable sources of education available at a much lower cost.

P.S. you will not be eligible for any state scholarships at Kaplan unless you live in Iowa.

The Kaplan admissions telephone sales force is staffed is extremely aggressive. They sit in cubicles and try call 150 people a day or 750 calls a week. They try to get more than 3 students to enroll every month. Once they get a possible student on the line, they will do everything they can to get you to enroll. The telemarketing techniques they use can be very convincing. For example, I have seen people enroll who do not have computer access, don't know how to read or have a mental handicap. Reputable colleges have students calling them not the other way around.

By the way, once you enroll the admissions officers won't talk to you. So don't think they are your friends. You are their paycheck.

Will 55,000 buy you a quality education? Maybe. First, you have to graduate. When I left, the school was running into trouble with retention rates. This may explain why some of their staff are reporting a delay in paycheck payments. I can find graduation rates for other Universities on the web but Kaplan's is mysteriously missing. Perhaps this is a by product of enrolling anyone who will answer the telephone. As for the quality of education, a quick Kaplan search on Rip Off Report will show an extensive list of past Kaplan University students and they are not happy. Receiving a 55,000 education should make them happy.

Indeed, it should.

Yet that would mean that students are actually graduating from the schools and getting jobs with the degrees they received that help them pay off their loans.

Clearly that is NOT happening.

You would think the Washington Post, owned by Kaplan, would be embarrassed by these facts and might actually hold themselves and their company accountable (as they delight in holding D.C. teachers accountable), but you would be wrong.

Instead the Kaplan Test Prep Post attacked Democrats in Washington who have sought to regulate the for-profit college industry and make sure that schools are not stealing from students and taxpayers.

Here's what the crooks at the Post wrote:

THE OBAMA administration is considering rules that could sharply limit the availability of for-profit colleges to American students. The government is right to fashion reasonable regulation to discourage fraud or misleading practices, but it would be wrong to impose rules that remove an option that is especially useful for poor and working students.

Readers should know that we have a conflict of interest regarding this subject. The Washington Post Co., which owns the Post newspaper and washingtonpost.com, also owns Kaplan University and other for-profit schools of higher education that, according to company officials, could be harmed by the proposed regulations.

But our feelings about career colleges, as the for-profits are often called, are consistent with our editorial policy on education more broadly: that is, the more options available to parents and students, the better. Particularly among some Democrats, that's not always the prevailing view. But for the most part it has been the philosophy of the Obama administration, which is why an effort to narrow choice in this area would be inconsistent as well as misguided.

...

In a speech on higher education in Texas this month, President Obama noted that getting more Americans into -- and successfully out of -- college is an economic imperative. "It's an economic issue when the unemployment rate for folks who've never gone to college is almost double what it is for those who have gone to college," Mr. Obama said. "Education is an economic issue when nearly eight in 10 new jobs will require workforce training or a higher education by the end of this decade." But the president noted that in college completion the United States has been "slipping. In a single generation, we've fallen from first place to 12th place in college graduation rates for young adults." He vowed to reverse that trend.

...

But it's difficult to imagine achieving Mr. Obama's goal of 8 million more college graduates by 2020 if the for-profit sector is severely constricted. According to the Career College Association, as of 2006-07 about 9 per cent of the nation's 25 million college students were attending tax-paying schools such as Kaplan or Strayer University, and the number has been growing rapidly. It's been growing because for-profit schools have been adept at meeting the needs of working students who want to advance their careers but can afford to study only part-time and, often, online.

The government has an important role to play in helping to ensure that these students aren't taken advantage of. A recent Government Accountability Office video revealed repugnant instances of misleading and high-pressure recruiting, including by Kaplan employees. It's also reasonable to discourage students from paying for courses that promise but fail to deliver improved career prospects, which is why statistics on repayment of government loans are relevant.

Given that only 27% of Kaplan students can actually PAY BACK their loans, I think it is reasonable to assume that Kaplan schools are failing to deliver improved career prospects and instead are stealing millions of dollars from both students (many of whom do NOT belong in college without remediation and other academic services, as we learned from the former Kaplan admissions officer at Rip Off Report) and taxpayers.

Also, given the sleazy sales tactics and telemarketing scams, Kaplan uses to sign up any prospective student who can hold a pen, it is reasonable to assume Kaplan are not actually meeting the needs of working students but the needs of themselves and their investors.

As for helping students who can only go to school part-time, how about expanding state and city community colleges, which charge a fraction of the tuition that the for-profits charge, rather than provide taxpayer largesse in the form of Pell grants and student loans for the crooks in the for-profit industry?

Ah, but doing that would hurt the bottom line of the for-profit industry and the Wall Street investors who back them (including Goldman Sachs.)

So instead we get self-serving jive from the Kaplan Test Prep Post editors decrying new accountability rules that will force for-profit schools to show that students are graduating with useful degrees that expand their career opportunities and pay them enough to be able to pay back their students loans.

They don't say what kind of accountability measures they would support, only just that

If the data released Friday are used without further refinement, the effect will be to deprive many working students of their best option for higher education -- and to worsen the national problem that Mr. Obama has dedicated himself to solving.

So in other words, pay lip service to accountability and regulation of the for-profits, but DO NOT actually do anything to hold for-profits accountable.

Given how the same editors at the Post (and some of the columnists they have on staff, like Jay Matthews) delight in calling for new accountability measures for teachers but do NOT want to similarly be held accountable, I would have to say that not only are the editors at the Kaplan Test Prep Post crooks, they are also HYPOCRITICAL and SANCTIMONIOUS crooks.

QUESTION: Who Owns For-Profit Diploma Mill The Art Institutes?

ANSWER: Goldman Sachs!!!

And of course they're making a ton of money from the business, even as students who attend these schools are left with tons of debt and worthless diplomas:

Carrianne Howard dreamed of designing video games, so she enrolled in a program at the Art Institute of Fort Lauderdale, a for-profit college part-owned by Goldman Sachs Group Inc. Her bachelor’s degree in game art and design cost $70,000 in tuition and fees. After she graduated in December 2007, she found a job that paid $12 an hour recruiting employees for video game companies. She lost that job a year later when her department was shuttered.

These days, Howard, 26, makes her living in a way that doesn’t require a college diploma: by stripping at the Lido Cabaret, a topless club in Cocoa Beach, Florida. “I didn’t know what else to do,” she says. “I’ve got a worthless degree. It’s like I didn’t attend school at all.”

Like many investors, Goldman, owner of 38 percent of the Art Institute’s parent, Education Management Corp., was drawn to for-profit colleges by their rapid growth and soaring stock prices, reports Bloomberg Businessweek in its Aug. 9 issue. Now Goldman, which recently agreed to pay $550 million to settle U.S. civil-fraud charges related to the subprime mortgage meltdown, is invested in an industry under attack from Congress, the Obama Administration and dissatisfied students.

The Senate held a hearing Aug. 4 featuring a Government Accountability Office undercover probe that found recruiters at EDMC’s Argosy University in Chicago and 14 other for-profit colleges misled investigators posing as potential students about the cost and quality of their programs.

...

Government grants and loans to students, combined with booming enrollment, have made for-profit colleges a rewarding investment. Federal aid to for-profit colleges jumped to $26.5 billion in 2009 from $4.6 billion in 2000, according to the Education Dept. EDMC currently receives almost 82 percent of its revenue from federal financial aid programs.

...

EDMC also faces complaints from its own graduates and employees. A lawsuit filed in Texas state court by 18 students alleges they were misled about the accreditation status of their program, diminishing their degrees’ value and leaving them with debts they can’t repay. In another suit a former admissions officer claims the company engaged in high-pressure sales tactics, paying staff to sign up students. In July, dozens of faculty who tried, unsuccessfully, to form a union at one Art Institute campus complained that unqualified students were being let into their classes.

I'll tell you a quick story about the Art Institute.

I got excessed to Art and Design for one semester where I taught three sophomore classes. In one class was a very nice fellow from the support services program who read and wrote maybe at a fourth grade level. Very personable, very nice, but in need of a lot of academic assistance.

A few years after I taught at Art & Design, I saw this student, now 20, working as a security guard in a record story. He told me that he had signed up to go the Art Institute to study art but dropped out after two weeks because he couldn't keep up with the work. He owed thousands of dollars in loans just from that one semester and was trying to pay that off by working as a security guard. His mother (a single parent who lived in the projects and was herself trying to finish an associate's degree at BCC) was helping him pay the loan off but he thought he had years to go before it was done. The loan payments were close $400 a month.

It was at that point in time that I began to pay very close attention to the for-profit college industry and came to notice that almost EVERY student who attended one of these colleges left with a lot of debt and either no degree (because they were not given the academic and personal support necessary to do well in school) or with a worthless one like the woman from the Bloomberg.com story.

I have since made it my mission to give students the very devastating truths about schools like the Art Institute, Berkeley College, University of Phoenix, Laboratory Institute of Merchandising, Devry Institute, Technical Career Institute, Katherine Gibbs et. al.

Given the story above about the Art Institute and this story here about how the GAO investigated 15 for profit colleges and found fraudulent financial aid activity in ALL 15 as well as staff who gave students misleading information about costs and benefits of attending the school, I think it is very wise to warn students to steer clear of these predators.

As Senator Tom Harkin said about this industry:

"GAO's findings make it disturbingly clear that abuses in for-profit recruiting are not limited to a few rogue recruiters or even a few schools with lax oversight. To the contrary, the evidence points to a problem that is systemic to the for-profit industry," the Democratic chairman said.

Indeed. And when you see that corporations like Goldman Sachs have a 38% stake in for-profit schools like the Art Institute, you can see why the evidence points to systemic abuse and crime in the for-profit industry.

Harlem Children's Zone-Berkeley College Update

In response to this post here, Marty Lipp, the Communications Director at the Harlem Children's Zone says HCZ has no "business relationship" with Berkeley College or any other for-profit college.

Lipp says high school juniors and seniors at the HCZ programs are given a menu of colleges to apply to and Berkeley College just happens to be one of the choices on that menu. The menu also contains CUNY and SUNY schools as well as non-profit colleges and universities like Columbia and NYU.

He also says students are directed to apply to the SEEK program at CUNY schools, the EOP program at SUNY schools and the HEOP program at non-profit institutions if students fit the academic and financial criteria.

Lipp says the majority of HCZ students attend CUNY schools, though there are some at SUNY colleges and universities, a few at non-profit institutions, and a few at Berkeley College.

He says the students at Berkeley College are "doing well." When I asked what "doing well" meant, he said the contact that students at Berkeley have had with staff at HCZ has not raised any "red flags" that there are problems.

I am heartened to hear Mr. Lipp say that Harlem Children's Zone has no "business arrangement" with Berkeley College.

I am also heartened to hear that the staff at the HCZ counsel students to apply to CUNY, SUNY and non-profit schools and suggest the specialized SEEK, EOP, and HEOP programs when applicable.

And yet, something troubles me about the presence of Berkeley College on the menu of school choices made known to students.

Berkeley College is a non-profit institution that charges a little less than $30,000 a year for classes in a Bachelor's Degree program. So a Bachelor's Degree from Berkeley College will cost just under $120,000.

Now $120,000 is a lot of money for a college degree from even a reputable school, but from a proprietary school like Berkeley College, it is ridiculously overpriced. And while Berkeley College does not have notoriety of Interboro, Katherine Gibbs, or other scam schools, current and former students do not rank the school very high in their estimation and overwhelmingly say they would not attend there again if they could do their schooling all over (see here and here for some student reviews of the school.)

Berkeley offers nothing that the much cheaper and more reputable CUNY and SUNY 2-year and 4-year programs offer, so I don't understand why the Harlem Children's Zone has Berkeley College on it's list of schools for students to apply to when they're high school seniors.

If the goal of the Harlem Children's Zone is to, as they say on the website, use their "'whatever it takes' attitude when it comes to helping children to succeed," and "evaluate and track the results of their work" in order "to take corrective actions if they were not," they might want to track the outcomes from the students who attend Berkeley College or any other for-profit post-secondary school that they offer as options on their college lists.

What are the graduation rates of students who attend those schools? What is the debt level? Do they work in their chosen fields when they graduate and if so, for how long? More importantly, could they have worked in those chosen fields without the dubious credential they paid either $60,000 or $120,000 to receive? And finally, do the students who graduate from these institutions make a livable wage that enables them to pay off the loans they had to take out in order to attend these for-profits.

The reality is that the typical student who attends the Harlem Children's Zone programs would go to CUNY for free + receive money for books and expenses from the federal Pell Grant program, the state TAP program, and perhaps even the SEEK or College Discovery program. That same student would perhaps have to take out a $5,000 loan a year to attend a SUNY school where tuition, room, and board is about $17,000 (Pell, TAP, and EOP grants usually cover the rest.) Non-profit institutions like NYU and Columbia can be much more expensive, but if the student is academically eligible for the HEOP program, they can go for a fraction of the cost of the tuition and receive a very reputable education and valuable credential (and some schools cover almost all of the cost for HEOP students - I have had half dozen students attend Syracuse University in the HEOP program for as little as $2,000 a year after receiving federal, state and campus-based aid.)

The reality for students who attend Berkeley College at about $30,000 a year is $15,000-$20,000 a year in loans even after they receive the Pell grant, TAP, and the campus-based aid Berkeley College offers to financially-qualified students.

A low income student who receives a Bachelor's Degree from a 4-year CUNY will complete her/his schooling with little-to-no student loan debt.

A low income student who graduates from a SUNY 4-year school will be carrying some loan debt, but it will be mitigated by the value of the diploma (many of the 4-year SUNY schools are quite good and some, like Binghamton and Stony Brook, are world class.) If the student was part of the EOP program, the loan debt will be pretty small, relative to what colleges cost these days (perhaps about $20,000 in loan debt for all four years.)

But a low income student who graduates from Berkeley College will graduate with $60,000-$80,000 of loan debt.

That's an awfully big debt to start out your adult life with, but especially so if you took it on getting a degree from a school like Berkeley College.

So just checking in with former HCZ students now attending Berkeley College to see if there are any "red flags" isn't doing enough for them.

I meet with every senior I teach in the fall semester to talk about their college plans, their financial situations, etc., and when I saw that every student I had in my class who was also in the Harlem Children's Zone had Berkeley College on their lists of colleges to apply to, I grew concerned. When I called one of the sites back in the fall, I was told by one of the coordinators that HCZ had a "business arrangement" with Berkeley College, which is why students were given that college to put on their list of prospective schools. I asked for more information about this arrangement and was told I would hear back from somebody about this, but never did. I called again last week about this concern, again was told I would hear back from somebody at HCZ, but never did.

It wasn't until I blogged about my concerns that suddenly the HCZ was concerned about my concerns. Mr. Lipp told me that the person I talked to earlier who noted a business arrangement between HCZ and Berkeley was "not authorized to speak for the organization" and was uninformed about the subject.

Perhaps that is so. But when I spoke to another site coordinator this week, I was told that a group from Harlem Children's Zone including this person had just toured Berkeley College. So while I will take Mr. Lipp at his word that Harlem Children's Zone does not have a business arrangement with or receive any money from Berkeley College, I would also note that they're not exactly warning kids about the dangers of the for-profit schools when the staff is also getting a tour of the facilities there.

I will assume nothing nefarious goes on here, that the Harlem Children's Zone folks do not see proprietary schools with the same skeptical eyes that I do. Having heard from too many students who had been suckered in by the sales pitches at Berkeley College, Art Institute, Laboratory Institute of Merchandising and elsewhere who were left with somewhere between $30,000 and $80,000 dollars in debt and either useless credentials or college credits that wouldn't transfer to any reputable school, I believe students need to be made aware of the dangers and track records of these schools.

This doesn't mean that CUNY, SUNY and non-profit institutions do not have their problems, only that they are nowhere near as pronounced and troubling as the ones I see at the for-profits schools.

What's Wrong With For-Profit Colleges?

Plenty.

A Denver Post article about for-profit colleges examined graduation rates, loans, default rates and other federal Department of Education data and reported that "for-profit schools as a group underperform their public and nonprofit counterparts."

Here is a summary of their findings:

• For-profit students are defaulting on their loans at much higher rates than students enrolled in public or private nonprofit schools. Twenty-three percent of students who attended Colorado for-profit schools were in default in the first three years they are required to make payments, according to a Denver Post analysis of 2009 federal Department of Education data.

Adams State College in Alamosa had the state's highest default rate among four-year public schools at 15 percent.

• Tuition rates are high. Associate's degrees usually run $30,000 to $40,000, and bachelor's degrees usually cost between

$60,000 and $75,000 at for-profit colleges.

That compares with Metropolitan State College of Denver, where a three-year bachelor's degree runs about $12,900, and the University of Colorado at Boulder, where the cost is $29,000 for in-state students. At the private, nonprofit University of Denver, a three-year bachelor's degree costs $148,704.

• Taxpayers are paying for it. Last year, Colorado students received $1.6 billion in federal loans and Pell grants. Of that, $690 million went to for-profit schools, according to an analysis of federal loan data.

• Twenty-five percent of students seeking bachelor's degrees at for-profits receive their degrees within six years, compared with 55 percent at public colleges

and 64 percent at private nonprofit colleges, according to the National Center for Education Statistics.

For-profit schools say they serve a needier student population than most other colleges, which pulls down their graduation rates. Indeed, public schools that serve higher-risk populations, such as Metro State, do not perform any better. Its six-year graduation rate is 22 percent.

• Since 2006, the Colorado Department of Education has received 164 complaints against for-profit colleges — or one for every 214 students attending for-profit schools allowed to collect federal loan dollars. That compares with 178 complaints filed against public colleges — or one for every 1,224 students.

While the complaints themselves are not public, state officials told The Post the complaints against public schools are mostly academic in nature — disputes about grades or professors, for example. Complaints from students attending for-profit schools are consumer in nature, ranging from recruiting practices to lack of transparency about tuition costs and financial aid, according to John Karakoulakis at the state Department of Higher Education.

Now the Post article focused on Denver, but there is plenty of evidence nation-wide that for-profit schools do more harm than good.

94% of students who attend for-profit colleges take out federal student loans. The Wall Street Journal found that students who attend for-profit colleges have higher default rates on their student loans than students who attend public and nonprofit colleges and universities. Many students at for-profit schools are left with an overwhelming level of debt and scarce opportunities for gainful employment in their specific fields. The link between gainful employment and debt levels has led the Department of Education to review financial aid policies to all schools, but especially for-profits, though like much in Washington these days, it looks like any new proposals in the area are gridlocked and ultimately nothing will get done.

But something needs to be done about these schools.

I know that we live in a society these days that privileges "going to college" but it is very important that high school students be provided with good counseling about the process, especially with college costs so high.

A college degree only helps kids when it actually aids them in finding gainful long-term employment.

A college degree harms kids when it leaves them with tens of thousands of dollars of student loan debt and useless or less-than-useful credentials.

The NY Times reports this morning that 60% of Americans now see colleges "as businesses, concerned more with their bottom line than with the educational experience of students."

Nonprofit institutions with tuition prices as high as $50,000, $60,000 or $70,000 a year are part of the problem here, but for-profits are the most worrisome to me because as a University of Phoenix enrollment director told recruiters in 2003, "It's all about the numbers. It will always be about the numbers."

When you run a school as a business, the bottom line is always the most important thing.

And the bottom line for these for-profit schools is not educating their students.

The bottom line is money.

Geoffrey Canada and the For-Profit Colleges

Geoffrey Canada, CEO of the Harlem Children's Zone, is the darling of the education "reform" movement.

I will leave the skepticism about Canada's "Harlem miracle" to others for now (see here and here for that) and focus on something else about Harlem Children's Zone that concerns me.

I teach in NYC and my seniors who belong to an after school program run by the HCZ all talk about wanting to go to Berkeley College (not the the California university, the for-profit one.)

Many of these are students in need of remediation, many of whom will be the first in their families to attend a post-secondary school. So they are desperately in need of good guidance and counseling.

I suggest either CUNY or SUNY schools, which are much cheaper than Berkeley College (Berkeley costs nearly $30,000, CUNY $4,000, tuition at SUNY is just over $5,000) and where the quality of education is so much better.

In fact, Berkeley College is barely a college. It's really more of a diploma mill - the kind where they brag about job placement rates rather than graduation rates because so many of their students drop out of school and never complete their degrees.

And while those students may not complete their degrees at Berkeley College, they do have to complete paying for the loans Berkeley loads them up with per year. Proponents of for-profit schools argue that drop-out rates at for-profit schools are no worse than at public 2-year and 4-year schools, and while that may be true in some cases, most public universities are not charging the kind of money Berkeley College is charging per quarter.

For example, a student who attends York College, a CUNY school, who drops out has paid a little less than $4,400 a year for the school. Even if that student was not eligible for a Pell grant, a TAP grant or any other free aid, the amount of loan debt the student would have from the CUNY school would be pretty minimal compared to the almost $30,000 he/she might incur at Berkeley College per year.

Now I suppose there are worse post-graduation choices a student could make than attending Berkeley College and paying $60,000 for an Associate's Degree in criminal justice or $120,000 for a Bachelor's Degree in the same field, but there are certainly many better choices he or she could make - like attending John Jay and receiving an Associate's Degree in criminal justice for $8,800 or a Bachelor's Degree in the same field for just under $17,000

So why is the Harlem Children's Zone, a program that purports to pride itself on academic excellence and high standards, pushing low-income kids to an expensive diploma mill like Berkeley College where an education will cost between $60,000 and $120,000 when more reasonable and more reputable colleges in the SUNY or CUNY system are available?

When I called HCZ, I was told that they have a "business arrangement" with Berkeley College, which is why they suggest students attend there.

I have tried to get more information from HCZ about this "business arrangement" but have been rebuffed since.

So, let's get this out there on the blogosphere. Does anyone know what kind of "business arrangement" Harlem Children's Zone has with Berkeley College that has them pushing kids toward this for-profit school when cheaper and better public universities are available?