For-profit colleges have been scrutinized for years, but now the Department of Education's taking action.
The U.S. government's investigation into for-profit career colleges led to one the largest institution's closing this month.
Santa Ana, Calif., is the home base for Corinthian Colleges International. You may have heard of some of the offerings from the company. Corinthian's national schools and programs included Everest, Everest University Online, Everest College Phoenix, Heald College, and WyoTech.
Everest's known for the television ads where students join to earn their degree or diplomas in health care, business, HVAC (heating, ventilation and air conditioning), and computer and electronic technologies. Even Master degrees were available. Everest is the main program where Everest Institute, Everest University, Everest College, Everest University, Everest University Online, and Everest College Phoenix.
Mandi Woodruff's report for Yahoo Finance, "Government investigates major for-profit university, leaving students in the lurch,” offers a grim picture of what happened to Corinthian.
When Nicole Dykstra walked into class in early July, she knew something was wrong. The Kalamazoo, Mich., based Everest Institute had the campus president and both directors of career and student services ready to meet the students. After announcing the closing of campus, "they said they had saturated the market in that part of the state and enrollment was down."
Not entirely the truth since the Department of Education made it clear the Corinthian system would have to close due to an investigation. But no one really told the students that. Or the fact the company was forced to close 12 campuses across 11 states while selling off 85 more campuses.
Woodruff noted that when Corinthian failed to respond to a Department of Education request about student enrollment and financial aid data, "the government put a three-week hold on financial aid payments to the school."
Why's that important? Well, for-profits almost entirely depend on financial aid, like student loans, for payment. And Corinthian's $1.6 billion revenue is almost entirely made up from the aid. Withholding that money pretty much stops campuses from functioning.
The investigation isn't particularly new since the Department of Education and Congress have been "pushing for more power to deny federal financial aid to for-profit schools that aren’t delivering on their promises to students, attempts that have been aggressively combated by the for-profit industry."
In short, students aren't graduating with degrees that provide instant career opportunities, as promised, or do not graduate at all. And 96% of students enrolled in both four-year private and two-year for-profit colleges take on student debt, where the average tuition may run $15,130 a year. That's nearly twice the price of a public four-year institution, where the diploma and degree posted on the wall offers some value for most employers.
Either way, the students are deep in debt. Students have been afraid of degree and diploma stigmatism for years, but especially since the government's keeping any eye out now. The Michiganian student voices the concerns of many students. “With all the national attention that’s happening now I’m worried about how this will affect me looking for jobs."
Dykstra wasn't swayed by the school's television ad promises, but instead by the fact her friend's massage therapy helped her 7-year-old son move around easier with his spina bifida, which is a reason most mothers would agree to scrape together the tuition fees and increase loans. Kid's comfort and mobility, to offer peace? Easy decision.
But she says feels like teachers are checked out since employment will be severely limited. Corinthian had over 90 campuses within the network, offering employment and benefits in a very conservative educator market. Through Department of Education intervention, Corinthian Colleges will slowly shutter their doors, so current students may earn the degree but no new students will be admitted.
Yet the "teach out" plan of a closed schools and promised lifetime job placement counselor isn't really helping Dysktra, either. A checked out teacher means she's not even receiving what she's paying for. "I need that instruction, so that I can get my license and complete the massage therapy test and know what I’m doing." Employers do expect employees to know the basics.
It's not just Corinthian going through crisis. The University of Phoenix announced last Monday "that its financial aid programs were also under review by the Department of Education." With over 241,000 students, that's a lot of incoming headaches for the school—and many more for the students who put their faith (and debt) into a better life.
While it's important to examine the for-profit school, it's also important to remember to find places for those hundreds of thousands of students who've gone into debt for a better life…and may just end up in a worse position than when started. With a 22% default ratio, the lack of ability to pay back such high loans is nearly double what the public institution ratio faces.
Barmak Nassirian, American Association of State Colleges and Universities director of federal relations and policy analyst, has a warning for the for-profit colleges. “Corinthian’s demise should serve as a wake-up call to the for-profit sector that predatory practices will finally catch up with bad actors.”
None of the answers available are easy. And many Corinthian students are facing hard decisions right now.
Source: Yahoo Finance