Transgender men and women may now serve openly in our armed forces.
Corporal Klinger was ahead of his time.
Thursday, June 30, 2016
Is student-loan debt stifling entrepreneurs...
or is this just a Clinton campaign gimmick? Many commentators believe the latter.
Clinton's plan would permit deferral of repayment, and eventually forgiveness of up to $17,500. This is not a new idea. Like tax deferrals and tax exemptions, student-loan deferrals have been a tool of public policy in Washington for decades.
When I went to college in the late sixties, my financial aid package included federal loans. I left Franklin & Marshall College owing $3,000... probably the equivalent of $30,000 (or the national average) today. Initially, I went into the US Coast Guard. My loan repayment was on hold with no interest during that four-year period.
Then, when I went to work in the PR department at Case Western Reserve, I also began taking courses toward my Ph.D. Since I took two courses a semester, I could continue to defer repayment of these loans. After nearly five years in the communication shop at CWRU, I became a full-time law student there. Not only were my loans kept on hold. I also borrowed more for law school.
Eventually, after law school... and a dozen years after my college graduation... I began a 13-year repayment cycle, which eventually saw all my government loans repaid in the early 1990s.
The loans I received in college were called National Defense Loans, an artifact of the Cold War. And, perhaps oddly, though those serving in the military, such as myself, got our repayments deferred, contemporaries who went into K-12 teaching (if my memory serves me) got a percentage forgiven for every year they stuck with it.
Tax breaks on mortgage interest payments are intended to encourage home ownership. They work. Student-loan deferrals and forgiveness also have worked in the past. Mrs. Clinton faces two questions she needs to answer, if her proposal is to rise above the "gimmick" label:
1. Is encouragement of entrepreneurship a public-policy priority of the federal government?
2. And, if so, will student-loan deferrals and forgiveness achieve this policy goal?
Until she answers her critics on these two points, her plan remains a campaign stunt.
Clinton's plan would permit deferral of repayment, and eventually forgiveness of up to $17,500. This is not a new idea. Like tax deferrals and tax exemptions, student-loan deferrals have been a tool of public policy in Washington for decades.
When I went to college in the late sixties, my financial aid package included federal loans. I left Franklin & Marshall College owing $3,000... probably the equivalent of $30,000 (or the national average) today. Initially, I went into the US Coast Guard. My loan repayment was on hold with no interest during that four-year period.
Then, when I went to work in the PR department at Case Western Reserve, I also began taking courses toward my Ph.D. Since I took two courses a semester, I could continue to defer repayment of these loans. After nearly five years in the communication shop at CWRU, I became a full-time law student there. Not only were my loans kept on hold. I also borrowed more for law school.
Eventually, after law school... and a dozen years after my college graduation... I began a 13-year repayment cycle, which eventually saw all my government loans repaid in the early 1990s.
The loans I received in college were called National Defense Loans, an artifact of the Cold War. And, perhaps oddly, though those serving in the military, such as myself, got our repayments deferred, contemporaries who went into K-12 teaching (if my memory serves me) got a percentage forgiven for every year they stuck with it.
Tax breaks on mortgage interest payments are intended to encourage home ownership. They work. Student-loan deferrals and forgiveness also have worked in the past. Mrs. Clinton faces two questions she needs to answer, if her proposal is to rise above the "gimmick" label:
1. Is encouragement of entrepreneurship a public-policy priority of the federal government?
2. And, if so, will student-loan deferrals and forgiveness achieve this policy goal?
Until she answers her critics on these two points, her plan remains a campaign stunt.
Wednesday, June 29, 2016
Clinton's tech and innovation agenda unveiled
Her agenda, should she win in November, includes:
- federal financial aid eligibility for alternative education providers
- softening student-loan repayment obligations for entrepreneurs
- making it easier for international STEM majors to get green cards after graduation
And here's Inside Higher Ed's take on it, which includes links to other commentators.
Meanwhile, her likely opponent, Donald Trump, yesterday characterized the new Pacific Rim trade deal as "rape" of America. Reportedly, even the US Chamber of Commerce --- synonymous with Republican --- has criticized him for this stand.
That, of course, doesn't mean he's wrong. But here's a website that criticizes tariffs. I personally am not sufficiently informed about economics or economic history to know if a new tariff war in the 21st century would help or hurt the US. I have the greatest sympathy for those Americans who once enjoyed good jobs and solid middle-class status as factory workers and members of industrial unions. Whether we can ever bring back those halcyon days of the mid-20th century, when I was just a boy, I really don't know.
I will say this: In my opinion this is Trump's strongest platform plank, whether the US Chamber and the Republican establishment like it or not.
Tuesday, June 28, 2016
What does college really cost?
An article published by Inside Higher Ed today does a nice job of illustrating how illusory college costs are. They make buying a car look like a very simple transaction.
For example, a private university may have a very high tuition price tag. But following on the automotive metaphor, the price tag most likely does not reflect the true cost to the vast majority of attending students. Discount rates today frequently average 50 % or more. When the actual cost is revealed, savvy students and parents find that they are paying little more than the local state school charges, but may be getting smaller class size, greater exposure to full-time faculty, and better support services than the public rival can offer.
Pre-2008, when home equity was a vast and expansive bubble, parents regularly borrowed against their home values to send their kids to the colleges of their choice. That bubble burst with a pop heard round the world, as we all ruefully recall. Since then, some potential students have chosen to enter the trades or the military in lieu of college. Among the millions who still attend every year, a number of trends are discernible:
1. The market has forced colleges to accede to all sorts of mix-and-match methods of getting to a BA or BS degree: two years of community college; MOOCs and other online offerings; credit for life experiences; AP credits during high school... and more.
2. Parents and students have become savvy shoppers. With the common app online making it easy, students are applying to large numbers of schools. Back in 1965 I applied to two. My son in 2002 applied to four or five. Today, 8-10 is more the norm.
3. Parents will put down deposits at multiple schools following favorable admissions decisions for their sons and daughters. Then the negotiations begin.
4. And negotiations don't end at the college gate. Once students are on campus, they and their helicopter (velcro?) parents make sure that the institution delivers on all its promises.
5. And it doesn't even end there. Some alumni have taken to suing their alma maters when the jobs don't materialize. One such law school grad last spring lost her case against the Thomas Jefferson Law School in a 9-3 jury verdict.
Yes, the pipe-smoking, tweedy world of "It Happens Every Spring" , and the happy-go-lucky life of the "Animal House" have given way in the new century to a dog-eat-dog competitive environment in which the higher education "industry" will see the weak competitors fall by the wayside.
In this Brave New World of online-learning, sexual-assault adjudications, class actions by athletes who want to paid as employees, presidents who want to be rewarded like for-profit CEOs, a Department of Education that wants to crush the accrediting agencies... in this Brave New World, below the top tier (where Harvard andYale and Princeton still reign), cost is indeed King.
For example, a private university may have a very high tuition price tag. But following on the automotive metaphor, the price tag most likely does not reflect the true cost to the vast majority of attending students. Discount rates today frequently average 50 % or more. When the actual cost is revealed, savvy students and parents find that they are paying little more than the local state school charges, but may be getting smaller class size, greater exposure to full-time faculty, and better support services than the public rival can offer.
Pre-2008, when home equity was a vast and expansive bubble, parents regularly borrowed against their home values to send their kids to the colleges of their choice. That bubble burst with a pop heard round the world, as we all ruefully recall. Since then, some potential students have chosen to enter the trades or the military in lieu of college. Among the millions who still attend every year, a number of trends are discernible:
1. The market has forced colleges to accede to all sorts of mix-and-match methods of getting to a BA or BS degree: two years of community college; MOOCs and other online offerings; credit for life experiences; AP credits during high school... and more.
2. Parents and students have become savvy shoppers. With the common app online making it easy, students are applying to large numbers of schools. Back in 1965 I applied to two. My son in 2002 applied to four or five. Today, 8-10 is more the norm.
3. Parents will put down deposits at multiple schools following favorable admissions decisions for their sons and daughters. Then the negotiations begin.
4. And negotiations don't end at the college gate. Once students are on campus, they and their helicopter (velcro?) parents make sure that the institution delivers on all its promises.
5. And it doesn't even end there. Some alumni have taken to suing their alma maters when the jobs don't materialize. One such law school grad last spring lost her case against the Thomas Jefferson Law School in a 9-3 jury verdict.
Yes, the pipe-smoking, tweedy world of "It Happens Every Spring" , and the happy-go-lucky life of the "Animal House" have given way in the new century to a dog-eat-dog competitive environment in which the higher education "industry" will see the weak competitors fall by the wayside.
In this Brave New World of online-learning, sexual-assault adjudications, class actions by athletes who want to paid as employees, presidents who want to be rewarded like for-profit CEOs, a Department of Education that wants to crush the accrediting agencies... in this Brave New World, below the top tier (where Harvard andYale and Princeton still reign), cost is indeed King.
Monday, June 27, 2016
Where would they go?
This Chronicle article asks whether faculty will be leaving public universities "in droves" due to budget droughts and political turmoils.
Here's what the author concludes:
It appears they haven’t. But the threat of departures has led to plenty of maneuvering behind the scenes, and to other consequences as well.
Many public colleges in Wisconsin, where legislators stripped tenure protection and $250 million in support, and in Illinois, where a state-budget impasse has left campuses in the lurch, didn’t lose substantially more faculty members to other institutions than in previous years.
But even if most professors are staying put, many have considered leaving. Some have quietly entered the job market, and others may soon follow. Meanwhile, universities elsewhere have escalated efforts to lure top scholars away from besieged competitors.
The top dogs can go where they want... just as the top universities can buy whomever they want.
But the reality is that most faculty, especially senior faculty, have no place else to go. Who is in the market for a fifty something or sixty something English professor? And even if a job comes up, the chances of transporting her/his tenure are probably nil. That, indeed, is the main reason faculty need to cling to their tenure, if they are among the third of university teachers who still have it.
And so, it seems that politicos like Wisconsin's anti-labor governor and legislators can do pretty much what they want, without worrying about some mass exodus of faculty from their state university systems.
Anyway, that's how it looks from here.
Here's what the author concludes:
It appears they haven’t. But the threat of departures has led to plenty of maneuvering behind the scenes, and to other consequences as well.
Many public colleges in Wisconsin, where legislators stripped tenure protection and $250 million in support, and in Illinois, where a state-budget impasse has left campuses in the lurch, didn’t lose substantially more faculty members to other institutions than in previous years.
But even if most professors are staying put, many have considered leaving. Some have quietly entered the job market, and others may soon follow. Meanwhile, universities elsewhere have escalated efforts to lure top scholars away from besieged competitors.
The top dogs can go where they want... just as the top universities can buy whomever they want.
But the reality is that most faculty, especially senior faculty, have no place else to go. Who is in the market for a fifty something or sixty something English professor? And even if a job comes up, the chances of transporting her/his tenure are probably nil. That, indeed, is the main reason faculty need to cling to their tenure, if they are among the third of university teachers who still have it.
And so, it seems that politicos like Wisconsin's anti-labor governor and legislators can do pretty much what they want, without worrying about some mass exodus of faculty from their state university systems.
Anyway, that's how it looks from here.
Friday, June 24, 2016
Affirmative Action after yesterday's Supreme Court Fisher Decision:
Here is a variety of views from a range of sources:
- As Fisher Churened, Conversations about Campus Diversity Evolved
- Race Conscious Admissions Policies Just Got Easier to Defend
- Fisher in Context; Making Sense of the Decision
- Supreme Court Upholds Consideration of Race
Here's what I have to add:
Q 9:21 Does
the government contractor’s affirmative action obligation place it in a
dilemma?
Many federal contractors, as well as universities receiving
federal funds, feel hooked on the horns of the affirmative action dilemma. The
dilemma is posed by the mixed signals from Washington, as well as some state
governments, concerning what contractors can and cannot do. Loss managers on
many college campuses are deliberating over it.
In 2003, the U.S. Supreme Court decided in Grutter v. Bollinger [539 U.S. 982 (2003)] that a diverse student
body is a legitimate consideration when making admissions decisions. This news
led not only to admissions policies according weight to race and ethnicity, but
also to speculation about—and some implementation of—faculty search policies
that embodied an analogous principle with regard to race and ethnicity of the
faculty.
A backlash against Grutter
has quietly gained momentum. In November 2006, Michigan passed a constitutional
amendment essentially intended to neutralize Grutter on the state's public university campuses. On December 4,
2006, the Supreme Court revisited its 2003 ruling, hearing oral arguments in
two cases in which the plaintiffs were challenging their states’ attempts to
inject Grutter's principles in the
K-12 environment. Louisville and Seattle parents asked the Supreme Court to
revisit its landmark affirmative action decision and declare that school
district schemes to consider race in making school assignments are
unconstitutional.
“In the November 2006 election, 58 percent of Michigan's voters
approved a proposal that amended the state Constitution. The amendment banned
discrimination, or the granting of preferential treatment, in public education,
government contracting and public employment based on race, sex, ethnicity or
national origin.” [http://www.upi.com/Top_News/US/2013/03/31/Under-the-US-Supreme-Court-Do-cases-sound-death-knell-for-affirmative-action/UPI-84731364715000/#ixzz2Ra7PV3Eq]
In March 2013 the U.S. Supreme Court agreed to hear a challenge to the legality
under the U.S. Constitution of this state constitution amendment. And, on June
24, 2013, the Court ruled 7-1 in a case involving the University of Texas
admissions policies, that the school's preferential admissions policy could
stand, if on remand UT could prove a need under the very difficult “strict
scrutiny” standard.
[Fisher v. University of Texas, 133 S. Ct. 2411 (2013)]
On April 22, 2014, the Court held that “no authority in the
United States Constitution would allow the judiciary to set aside an amendment
to the Michigan Constitution prohibiting affirmative action in public
education, employment, and contracting.”
[Schuette v. Coalition to Defend Affirmative Action, 134 S. Ct.
1623 (2014)]
The Supreme Court has again granted certiorari
and the case remains pending. Oral
arguments were again heard in December 2015.
Then, in the spring 2016, Justice Scalia died suddenly and unexpectedly
in his sleep, while the Court’s decision remained pending. With Justice Kagan recused from the case due
to her prior involvement as the U.S. Solicitor General, a seven-Justice Court voted on June 23, 2016 to endorse UT-Austin’s
admissions policy on the grounds that it passed the strict-scrutiny test
earlier enunciated by the Court and did not offend the U.S. Constitution.
Thursday, June 23, 2016
A predator curriculum? (And are the rest of us without sin?)
An article in yesterday's LA Times claims that Trump University urged its students to take advantage of distressed homeowners in the wake of the 2008 real estate bust to build their personal fortunes.
This is easy to believe, given Donald Trump's track record for shady dealing:
This is easy to believe, given Donald Trump's track record for shady dealing:
- Trump Empire Built on Shady Tax Breaks
- Cruz: Trump in 'Shady Deals' with Mobsters
- Forget Clinton's fake scandals- Trump's history of real estate grifts is the real deal
Trump aside, as many colleges and universities face financial crises in this challenging Fifth Wave in higher ed's history, what moral obligations do we face?
For example, the for-profit higher education sector has been under attack by the Department of Education for the past couple of years... and for good reason.
EXAMPLE: The Late, Great Corinthian Colleges
Less than three years ago, Corinthian Colleges, Inc. was one of
the biggest and most powerful players in the for-profit sector of higher
education. But by mid-2014 its neck was
in the Department of Education’s noose. The U.S. Department of
Education’s Federal Student Aid (FSA) office has placed Corinthian Colleges
Inc. on an increased level of financial oversight after the company failed to
address concerns about its practices, including falsifying job placement data
used in marketing claims to prospective students and allegations of altered
grades and attendance.
“The Department’s foremost interest is
to protect students and make sure they are educated by institutions that
operate in accordance with our standards,” said U.S. Education Under Secretary
Ted Mitchell. “We made the decision to increase oversight of Corinthian
Colleges after careful consideration and as part of our obligations to protect
hardworking taxpayers and students’ futures.”
Corinthian was the parent company of
the Everest Institute, Everest College, WyoTech and Heald brands, which enroll
72,000 students nationwide who receive $1.4 billion in federal financial aid
money annually. All of Corinthian’s campuses were required to wait 21 days
after submitting student enrollment data to draw down money for federal student
aid. The Department remains in close contact with Corinthian executives to
protect the interests of the students enrolled at its various campuses.
FSA places higher education institutions
on heightened financial oversight for a variety of reasons. The Department has
requested data from Corinthian multiple times in the last five months to
address inconsistencies in the company’s job placement claims for graduates,
but Corinthian officials have not turned over the documents. Since January
2014, the Department had sent Corinthian five letters requesting data and other
documentation required by law. The Department notified Corinthian of heightened
monitoring on June 12, which the company acknowledged today in a filing with the Securities and Exchange Commission. (DOE, June 19, 2014)
On June 23, 2014, the Depart announced that it
was working with Corinthian on a plan to avoid an immediate closure of the
career training program chain and prevent suddenly disrupting the education of
72,000 students and the jobs of 12,000 employees.
The
Department and Corinthian signed a memorandum of understanding Sunday that
requires the company to develop a plan to sell and teach-out programs across
the country over the next six months, including hiring an independent monitor
approved by the Department to oversee its finances and the sales process. In
exchange, the Department has agreed to immediately release $16 million in
federal student aid for students currently enrolled at Corinthian campuses.
Corinthian is required to provide enrollment documentation to back up the
funding request.
“Students and their interests have been
at the heart of every decision the Department has made regarding Corinthian,”
said U.S. Under Secretary of Education Ted Mitchell. “We will continue to
closely monitor the teach-out or sale of Corinthian’s campuses to ensure that
students are able to finish their education without interruption and that
employees experience minimal disruption to their lives. The Department is
committed to ensuring all students receive a quality education that leads to a
well-paying job and a strong future.”
Under the agreement, Corinthian is required to
put teach-out plans in place for all schools, including those for sale. An independent monitor approved by the
Department will review matters related to ongoing operations and will have
fulltime access to Corinthian’s financial and operating records. In addition,
Corinthian is permitted to continue enrolling new students but must reimburse
any students who enroll in a campus found to be ineligible for federal student
aid through the Department’s reviews and investigations.
The Department put Corinthian on
heightened financial monitoring with a 21-day waiting period for federal funds
on June 12th, after Corinthian failed to comply with repeated
requests to address ongoing concerns over the company’s practices, including
falsifying job placement data used in marketing claims to prospective students
and allegations of altered grades and attendance.
As part of the agreement, heightened
financial monitoring remains in effect and Corinthian has agreed to turn over
data that the Department has been requesting for the last five months to
address inconsistencies in the company’s job placement claims for graduates, as
well as grade and attendance records. Inquiries by the Department and other
federal agencies into Corinthian’s practices will continue. (DOE, June 23, 2014)
With the swiftness of the changing tides, by early July 2014 the DOE and Corinthian agreed to an operating plan
that provided the company’s 72,000 students at the company’s career colleges a
chance to complete their education and protects taxpayers’ investment while
Corinthian works to either sell or close its campuses across the country in the
next six months. The plan calls for an independent monitor that will oversee
this process for all programs owned by Corinthian, including Everest, Heald and
Wyotech campuses. “We have accepted an operating plan for Corinthian Colleges
Inc. that will protect students’ futures and fulfill the Department’s
responsibilities to taxpayers moving forward,” U.S. Education Under Secretary
Ted Mitchell said. “Ensuring that Corinthian students are served well remains
our first and most important priority, and we will continue to work with
Corinthian officials and the independent monitor on behalf of the best
interests of students and taxpayers.” In order to ensure that Corinthian can
still provide classes for its current students, the Department has agreed to release
$35 million in student aid to be used solely for education activities - all of
which must be approved by the Department. Under the operating agreement, which
is effective July 8th Corinthian also agreed to the following:
- Corinthian’s
campuses will inform students of their options, and every campus will
institute a plan so students can complete their programs without
disruption, if they choose to do so. The operating plan will also
immediately halt enrollment at schools that are operating under this teach-out
provision and require additional notification and disclosures for campuses
that are being sold.
- Corinthian
will only use federal student aid funds for normal daily operations,
including student refunds, payroll expenses (including retention arrangements),
accounts payable, interest and related fees, and related professional
fees. Corinthian will not use federal funding to pay dividends, legal
settlements of lawsuits or investigations, or debt repayments.
Additionally, bonuses, severance payments, raises and retention agreements
must be reported to the monitor and the Department at least two weeks
prior to the creation of contractual obligations and are subject to the
approval of the Department.
- Corinthian
will hire an independent monitor - approved by the Department - that will
have full and complete access to Corinthian personnel and budgets to
ensure prudent financial management and see that taxpayer-funded federal
student aid dollars are spent well. The monitor will also review teach-out
plans and sales of schools, and ensure students have multiple ways to
submit feedback and any complaints about the process.
- Corinthian
will also make refunds available to students in a number of circumstances.
Corinthian and the Department will work together with the assistance of
the monitor to establish a reserve fund of at least $30 million for
Corinthian to pay those refunds.
- Corinthian
will turn over all enrollment and job placement data required by federal
law – and overdue to the Department since January - by July 15th. (DOE, July 3, 2014)
By the middle of that fateful month, the DOE took
additional steps to ensure Corinthian Colleges’ students and the American
taxpayer are protected by announcing that Skadden, Arps, Slate, Meagher &
Flom LLP & Affiliates, under the leadership of former U.S. Attorney Patrick
Fitzgerald, has been selected to take on the role of monitoring various aspects
of the career college company.
As part of the operating agreement reached
earlier this month with Corinthian, the Department required that an independent
monitor oversee Corinthian’s actions moving forward as the company begins to
sell and wind down its campuses over the coming months.
“Mr. Fitzgerald and his team will play a
critical role in making sure that the Department is provided with an accurate
accounting of Corinthian’s operations to ensure students are protected as well
as protecting the integrity of taxpayers’ investment,” said U.S. Under
Secretary Ted Mitchell. “The monitor will strengthen our efforts to ensure
prudent financial management while overseeing an orderly process for students
to complete their education – rather than students being left in the lurch as a
result of an abrupt closure. With every action we’ve taken, our priority has
been, and will continue to be, to put the interest of students first. We are
confident that today’s announcement underscores that priority.”
Fitzgerald was appointed U.S. Attorney
for the Northern District of Illinois in 2001 by President George W. Bush. As U.S.
Attorney, Mr. Fitzgerald led several high profile investigations and
prosecutions, including the convictions of two former Illinois Governors,
George Ryan and Rod Blagojevich. Mr. Fitzgerald was also selected as Special
Counsel to investigate the leaks in the Valerie Plame matter and tried the case
of United States v. Lewis “Scooter” Libby. Skadden was selected by The American Lawyer as a finalist in its 2014 Litigation
Department of the Year issue and was named “Investigations Firm of the Year” at
the 2014 Who’s Who Legal
Awards.
As articulated in the operating
agreement the Department signed with Corinthian Colleges, the monitor was given full and complete
access to Corinthian personnel and budgets for the company, review all sales
processes, and ensure that teach-out plans, which allow students to complete
their program, are followed. The monitor will also confirm that Corinthian is
in compliance with the production of documents and will review Corinthian’s
rosters prior to their submission for the drawdown of Title IV Student Aid
Funds and will also review campus eligibility. In addition, the monitor – which
is fully funded by Corinthian – will see that students and Corinthian employees
have multiple ways to submit feedback and complaints. The monitor reports
solely to the Department and will do so on a regular basis.
As part of the operating agreement,
Corinthian agreed to make full refunds available to students in a number of
circumstances. Corinthian and the Department also agreed to work together with
the assistance of the monitor to establish a reserve fund of at least $30
million for Corinthian to pay those refunds. Corinthian is limited in using
federal student aid funds to pay only for normal daily operations, and it
cannot use federal funding to pay dividends, legal settlements of lawsuits or
investigations, debt repayments, or payments related to private student loans.
In addition, the Department continued its
investigation of various Corinthian campuses and continued to do so throughout
this process. Under the Higher Education Act, the Department is responsible for
ensuring the effective administration and oversight of the approximately $150
billion in federal student aid that is disbursed each year to all Title IV
institutions. Corinthian receives approximately $1.4 billion a year in federal
student aid. For several months, the Department has been looking into serious
concerns about Corinthian’s compliance with federal law. This includes
assessing issues that have been identified through investigations conducted by
other federal, state and local agencies.
The Department announced that it would
“work closely with Mr. Fitzgerald and his team in the coming weeks and months,
to ensure that students are protected and have the information they need to
make informed decisions about their education.” (DOE, July 18, 2014)
The following year, Arnie Duncan’s other shoe dropped. In April 2015 the DOE confirmed
cases of misrepresentation of job placement rates to current and prospective
students in Corinthian's Heald College system. The Department found 947
misstated placement rates and informed the company it is being fined about $30
million.
Specifically, the Department determined
that Heald College's inaccurate or incomplete disclosures were misleading to
students; that they overstated the employment prospects of graduates of Heald's
programs; and that current and prospective students of Heald could have relied
upon that information as they were choosing whether to attend the school. Heald
College provided the Department and its accreditors this inaccurate information
as well.
The Department also notified Corinthian
it intended to deny Corinthian's pending applications to continue to
participate in the Title IV federal student aid programs at its Heald Salinas
and Stockton locations. Corinthian has 14 days to respond to the Department's
notice, after which the Department will issue its final decision. Moreover, the
Department has determined that Heald College is no longer allowed to enroll
students and must prepare to help its current students either complete their
education or continue it elsewhere.
Commented the DOE’s Press Office, “The
Obama Administration has led unprecedented efforts to protect consumers from
predatory career colleges. It has established new gainful employment regulations
to
hold career-training programs accountable and ensure that students are not
saddled with debt they cannot repay. These regulations ensure that programs
improve their outcomes for students – or risk losing access to federal student
aid. Last year, the Department announced a new federal interagency task force
to help ensure proper oversight of for-profit institutions, which will be led
by Under Secretary Ted Mitchell.
"This should be a wake-up call for
consumers across the country about the abuses that can exist within the
for-profit college sector," U.S. Secretary of Education Arne Duncan said
of the Department's enforcement action against Corinthian. "We will continue
to hold the career college industry accountable and demand reform for the good
of students and taxpayers. And we will need Congress to join us in that effort.
"Instead of providing clear and
accurate information to help students choose which college to attend,
Corinthian violated students' and taxpayers' trust," said Under Secretary
Mitchell. "Their substantial misrepresentations evidence a blatant
disregard not just for professional standards, but for students' futures. This
is unacceptable, and we are holding them accountable.
“As part of these ongoing efforts to
ensure that career colleges prepare students for the workforce, institutions
are required to provide accurate information about their graduates' job
placement success and the types of employment their graduates obtained. The
Department expects all institutions to adhere to the highest standard of care
and diligence in following the requirements of participating in federal student
aid programs to ensure colleges are always doing right by students and
taxpayers.”
The majority of Corinthian's campuses
were sold to the nonprofit Zenith Education Group, which agreed to provide a
number of new consumer protections, such as providing refund and withdrawal
opportunities to students in poorly-performing programs, and has taken steps to
strengthen programs and improve affordability, including by reducing tuition.
The sale allowed most students to continue pursuing their career goals without
disruption, and the Department and the Consumer Financial Protection Bureau
have since worked to provide more than $480 million in loan forgiveness for
borrowers who took out Corinthian's high-cost private student loans.
In
its investigation of Corinthian Colleges, the Department found numerous causes
for concern with practices throughout the Heald College system. Some examples
include:
- Heald paid temporary agencies to hire
its graduates to work at temporary jobs on its own campuses – and counted
these graduates as placed. For example, Heald paid companies to hire
graduates for temporary positions as short as two days, asked them to
perform tasks like moving computers and organizing cables, and then
counted those graduates as "placed in field."
- Heald College counted placements that
were clearly out of the student's field of study as in-field placements. For example, one campus classified a 2011
graduate of an Accounting program as employed in the field based upon a
food service job she started at Taco Bell in June 2006. Another campus
counted a 2011 Business Administration graduate as placed in the field
based upon a seasonal clerk position she obtained in Macy's Shipping and
Receiving Department during November 2010, which the student stated ended
prior to her graduation.
- Heald College failed to disclose that
it counted as "placed" those graduates whose employment began
prior to graduation, and in some cases even prior to the graduate's
attendance at Heald. The Department's
analysis revealed that, according to Corinthian's own data for 2012
graduates, over one-third of the graduates reported to have been
"placed in field" started their jobs prior to January 1, 2012,
and over one-quarter started their jobs prior to January 1, 2011. And in
follow-up interviews with some of those students, they told the Department
that their jobs were not related to their field of study, nor had they
received promotions or increased responsibilities or otherwise progressed
in those jobs because of their Heald education.
- In some of its disclosures, Heald
failed to state that it had excluded students from its placement rate
calculations who the college said had deferred employment for one reason
or another. In one case, a criminal
justice program claimed a placement rate of 100 percent, but it had
classified almost 60 percent of the graduates as unavailable for
employment. In another case, a medical assisting program claimed a
placement rate of 100 percent based upon 51 graduates having been placed,
but it had classified almost 43 percent, or 38 of the 89 total graduates
of the program, as unavailable for employment.
Throughout this process, the Department
sought a wind down of Corinthian Colleges that protects students, safeguards
the investment taxpayers have made in their success, and creates opportunities
for students to finish what they started. In the coming days, the Department
will provide more information to Corinthian's students to help answer questions
about their federal student aid and their options. The Department is also
working on a process to help federal student loan borrowers submit a defense to
repayment of their federal student loans.
"We have kept students at the heart
of every decision we have made about Corinthian, and we will continue to do so
as we move forward," Under Secretary Mitchell claimed. "When our
borrowers bring claims to us that their school committed fraud or other
violations of state law against them, we will give them the relief that they
are entitled to under federal law and regulations." (DOE, April 14, 2015)
Two weeks later, Corinthian posted this
announcement on its website:
Corinthian Announces Cessation of
Effectively All Operations
All campuses closed effective Monday, April 27
SANTA ANA, Calif., April 26, 2015 – Corinthian Colleges, Inc.
(Nasdaq: COCO) today announced that the Company has ceased substantially all
operations and discontinued instruction at its remaining 28 ground campuses.
The company is working with other schools to provide continuing educational
opportunities for its approximately 16,000 students. Corinthian said those
efforts depend to a great degree on cooperation with partnering institutions
and regulatory authorities.
Campuses closed include Corinthian’s 13 remaining Everest and
WyoTech campuses in California, Everest College Phoenix and Everest Online
Tempe in Arizona, the Everest Institute in New York, and 150-year-old Heald
College–including its 10 locations in California, one in Hawaii and one in
Oregon.
Since signing an operating agreement with the U.S. Department of
Education in July 2014, the Company has been focused on completing the orderly
sale or wind-down of all of its schools. In November 2014, the Company
announced that it had entered into an agreement to sell 56 Everest and WyoTech
campuses to Zenith Education Group, Inc., a subsidiary of ECMC Group. As part
of that sale, Zenith also agreed to conclude the teach-out process at 12
additional schools that were being closed. That transaction was completed in
February of this year for all but three locations, the Everest College Phoenix
campuses in Phoenix and Mesa, AZ, and Everest Institute in Rochester, NY. As a
result of the sale, nearly forty thousand students were able to continue their
studies and thousands of employees kept their jobs. Zenith has recently advised
Corinthian that it will not consummate the purchase of Everest College Phoenix,
and the closing conditions have not been satisfied for Everest Institute
Rochester.
In parallel, the Company had been in advanced negotiations with
several parties to both sell the 150-year-old Heald College and to arrange for
teach-out partners to allow its Everest College and WyoTech students in
California to continue their education. The Company said these efforts were
unsuccessful largely as a result of federal and state regulators seeking to impose
financial penalties and conditions on buyers and teach-out partners.
”We believe that we have attempted to do everything within our
power to provide a quality education and an opportunity for a better future for
our students,“ said Jack Massimino, Chief Executive Officer of Corinthian.
”Unfortunately the current regulatory environment would not allow us to
complete a transaction with several interested parties that would have allowed
for a seamless transition for our students. I would like to thank our employees
for their selfless dedication and commitment to fulfilling the educational and
career goals of all of our students.“
The Company said that its historic graduation rate and job
placement rates compared favorably with community colleges. Corinthian also
said that approximately 40 percent of its students previously attended a
traditional higher education institution where their needs had not been met
before attending a Corinthian school.
”Colleges like ours fill an important role in the broader education
system and address a critical need that remains largely unmet by community
colleges and other public sector schools,“ Massimino said. ”Overall, our
schools did a good job for the students they served. We made every effort to
address regulators’ concerns in good faith. Neither our Board of Directors, our
management, our faculty, nor our students believe these schools deserved to be
forced to close.“
THE LATEST
This new attack calls into question the integrity of a large, and once highly successful, sector of higher education. As such, it dwarfs the Trump U. trials in significance to US higher education as a whole. We in the non-proft sector should not be complacent as this drama unfolds. New DOE rules could touch us in sensitive spots, too.
In the words of one observer: "New rulemaking says that fraudulent and financially risky schools may be
subject to disclosure and repayment penalties, which jeopardizes
for-profit schools, but also other institutions, like Hispanic-serving
institutions and historically black colleges. The department remains in
negotiations about how to more evenly apply the new rules with fewer
unintended consequences, but with yesterday's announcement, it remains
to be seen if that effort supersedes the department's rescue of
misguided students and taxpayers."
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