Trade school fraud: Kaplan schools in the news

The New York Times reports here on the Kaplan schools woes.  The Times goes to great lengths to note that its competitor, The Washington Post, owns Kaplan.  I suppose some might see it as a dig and turn of the knife, but it strikes me as appropriate because it helps explain how the owners of the  Post lobby against trade school regulation.

The article focused on the Kaplan criminal justice degree program. I was struck by this quote from a former Kaplan insider:

“In reality *** , graduates would often get the same $8 to $9-an-hour security guard jobs they could have had without Kaplan training.”

It sounds awfully familiar, as it is the same thing we’ve seen repeatedly in our consumer class action against Western Culinary Institute/Le Cordon Bleu College of Culinary Arts-Portland.  There is so much more about it that is insidious, including absorbing federal dollars that would otherwise go to student aid.

The for-profits spend a boatload of money on marketing and advertising. That money comes from tuition, and tuition dollars come straight out of the treasury.

It’s a lousy deal.

We’re still pushing forward on the culinary school case. Nice to see that responsible journalists are reporting on abusive trade schools. As for the Washington Post, you have to wonder.

For-profit trade school regulation–an insider speaks out

My friend and colleague, Portland attorney Josh Shulman, flagged this op-ed in today’s New York Times on trade school regulation.  The author teaches at both traditional non-profit colleges and for-profit programs.  It provides a clear explanation of the need for the gainful employment rule. The message isn’t new, but the messenger is uniquely qualified based on his work experience.

Why is the for-profit trade school industry so strongly opposed to these common sense reforms? What exactly is wrong with a rule that conditions taxpayer-funded federal aid on a program that produces valuable job skills without straddling the student with insurmountable debts? We know the horror stories. It’s time to clean up this mess.

Waiting to hear.

For-profit trade school regulations delayed…follow the money

In late summer–and with much fanfare–it looked like Congress and the Department of Education would finally address the outrageous abuses of bad actors in the for-profit education sector. Predictably, the pace has slowed to a crawl, with Department of Education delaying the promulgation of regulations.

Do you need to wonder why?

According to this report, most of the push back from Congress came from members who received campaign contributions from for-profit trade schools.

Most of the dispute focuses on the Department of Education’s proposed gainful employment rule. The gainful employment rule would put the brakes on bad actors in the for-profit trade school industry. The rules would limit federal student loan monies for those programs that saddle students with debts that cannot be reasonably repaid with degrees granted by the institutions.  Hmm…expensive degrees with heavy debt loads qualifying students for jobs that won’t allow them to pay off the debts. This sounds so familiar.

New Report: For-profit trade school misconduct

The Government Accounting Office released its report today,  GAO Report For Profit Colleges (pdf), highlighting a number of abuses by for-profit trade schools.  The GAO engaged in undercover testing to ferret out the fraud and abuse in for-profit admissions and lending.  Pretty scary stuff.

The GAO Report notes that approximately 2,000 for-profit colleges received federal funds of $24 billion in the 2008-2009 school year. At all 15 of the for-profit schools surveyed by GAO, admissions representatives made deceptive and questionable statements about graduation, employment and financial aid.

I’ve been laboring in a trade school class action against Career Education Corp. and Western Culinary Institute, which is now known as Le Cordon Bleu College of Culinary Arts in Portland.  I’m not particularly surprised by the GAO findings. Maybe the GAO report will spur Congress to take a hard look at these issues. That would be a good thing because we have sentenced a generation of kids to a lifetime of debt.

My view is that the current crisis stems from a nasty mix of deregulation and privatization. Give for-profit schools nearly boundless access to federal money. At the same time, do not regulate their conduct. Those were the first steps to sentencing a generation to a lifetime of debt.

Question: Will we be able to fix this thing, or are we just content to continue fiddling while Rome burns?

Western Culinary Institute class action featured in New York Times story

Peter Goodman of The New York Times does a nice job here of looking at the problem of for-profit trade schools. The story mentions our class action against Western Culinary Institute/Le Cordon Bleu College of Culinary Arts in Portland.  And while it’s all exciting to see the case written up in the Times, that’s hardly the point.

The Goodman article points out the disparity between the costs of trade school education and expected earnings.  I was taken by a Sr. Vice President, Brian Williams, comment, “You go in the industry and work your way up.”

I don’t have any idea how much Mr. Williams knows about labor statistics. But the cold reality is that there are very few high-paying jobs in the culinary field–at least as compared to the scads of low-wage kitchen jobs that require no training. In short, there isn’t much “up” to reach.

Some suggest that this is not different from an expensive law or medical degree or a BA in liberal arts from a four-year school. I suppose it’s tempting to take that view, but in reality the differences are profound.

Let’s look at them.

Western Culinary Institute/Le Cordon Bleu say in their catalogs that they provide entry level training. In the lawsuit, we take issue with what they don’t tell students.  A culinary degree doesn’t provide a student much in the way of qualifications for an entry level kitchen job. By comparison, you simply can’t practice law or medicine without degrees and licenses.

In marketing the program, the school tells its prospective students about high placement rates–above 90 percent. But they don’t talk about the pay.  The school collects initial placement and earnings for its graduates. As the New York Times article explains, the vast majority of students earn very low wages upon graduation. Those low earnings won’t allow most students to repay their loans.

Defenders of for-profit trade schools also cite the profoundly expensive four-year bachelors degree problem. They are right about the high cost of four year schools, but wrong to compare the two. Ivy league schools cost far in excess of most middle income families’ abilities to pay, leading many students to incur heavy debt loads.

But several things are different.  The liberal arts program doesn’t sell itself as “vocational training.” Nor does it tout its placement statistics or skill-based career training as the reason to attend. And the universities aren’t run by billion dollar corporations who are concerned about their Wall Street performance.

Our case has taken two years so far. If we succeed, students who suffered losses will recover money that will help pay down their debts.

We need better oversight of these schools, these loans and these lending practices, as students who enroll at for-profit trade schools often are underwater from the day they graduate.  Effective oversight of trade school programs and educational loans would prevent these types of abuses.