California's For-Profit Colleges Under Investigation

This story comes courtesy of California Watch.

By Erica Perez

The New York state attorney general's office has subpoenaed five for-profit college companies, including two California-based operations, Bridgepoint Education of San Diego and Corinthian Colleges of Santa Ana.

The New York Times and Bloomberg reported the investigation, which makes New York one of six states where attorneys general are known to be investigating for-profits' business practices. Attorneys general in Florida, Iowa, Illinois, Kentucky and Massachusetts have launched similar probes (see chart below). The New York attorney general's office is also looking into Career Education Corporation, Lincoln Educational Services and Trump Entrepreneur Services.

Corinthian Colleges spokesman Kent Jenkins said the company had received a request for documents on Thursday and plans to comply with the demand. He described the request as wide-ranging and general, saying it did not make specific references to the company's one campus in the state of New York - Everest Institute in Rochester.

Corinthian runs more than 120 campuses in 26 states and Canada under the Everest, Heald and WyoTech brands.

Then-California Attorney General Jerry Brown spent three years investigating Corinthian Colleges and filed a lawsuit [PDF] in 2007 alleging the company inflated its job-placement statistics, lied about how much students could expect to earn upon graduation, and offered programs that failed to meet minimum legal standards.

The company that year paid a settlement of about $6.5 million to the attorney general's office for consumer education and protection, and debt forgiveness for former students, among other uses. The company also agreed to stop enrolling students in 11 programs in nine California campuses, according to its 2007 annual report. But Corinthian admitted no wrongdoing, and some describe the sanctions as a slap on the wrist.

A spokeswoman for Bridgepoint Education said the company would comply with the subpoena, but she did not provide additional details about the request. Bridgepoint enrolls about 78,000 students in mostly online programs under the Ashford University and University of the Rockies brands, according to its most recent annual report. The company also has two campus locations in Colorado and Iowa.

Bridgepoint was the focal point of a March 2011 hearing of the Health, Education, Labor, and Pensions Committee. As the Huffington Post chronicled, Bridgepoint executives built the multimillion-dollar company by buying up small colleges that had regional accreditation but were financially strapped.

The company brought in $600 million in federal financial aid in 2010, while nearly two-thirds of students who had enrolled in 2008-09 had dropped out by September 2010.

"In the world of for-profit higher education, spectacular business success is possible despite an equally spectacular record of student failure," Sen. Tom Harkin, D-Iowa, said at the hearing, according to a Bloomberg report.

Earlier this month, Kentucky Attorney General Jack Conway said he is also leading a joint investigation into for-profit colleges by 10 state attorneys general.

Comments

[Crystal Rice]

08:34 PM on 06/02/2011

What no A.I.U. ???? Obviously more investigation needs to take place.

[rep suck]

04:46 PM on 05/26/2011

Yep it's about time someone started to pay attention to the ripp-off system that rewards lying. Now with all of the proof out there about these thief's, the Dept of ED should do a full investigation and find out just how much of a ripp-off this is and has been. I don't have any problem paying for a product or service, but when they lie to you and totally misrepresent the abilities of the school, we should have some kind of recourse.

[quoveritas]

03:09 AM on 05/26/2011

The dumbing down of America.

[quoveritas]

03:07 AM on 05/26/2011

Jack Welch, former CEO of GE - NBC/Universal has big stock in U. of Phoenix. Just take a look at all the ad buys ( commercials ) on its affiliate stations.

Things that make you go......hmmmm?

[snesich]

02:21 AM on 05/26/2011

Good!

It's about time. I want to see every one of these phony baloney "colleges" shut down permanently. Their "degrees" are worthless. And as an employer, I would never hire anyone who graduated from one of these places.

The ONLY reason these "colleges" can operate, and make huge profits, is due to their manipulation of the Student Loan programs. These businesses, posing as colleges, use the funds guaranteed by taxpayers, to stuff money into their own pockets. They don't care whether those loans are ever paid back or not. They still make money.

When over 85% of your revenue comes from student loans, you're just a corrupt business that is ripping off the taxpayer.

Shut these fraud factories down. And warn every kid you know to stay away from these shills. Congress, do your duty and end this corrupt gravy train.

[mlaiuppa]

07:49 PM on 05/25/2011

What? No University of Phoenix?

[hypnotoad72]

04:44 PM on 05/25/2011

For-profits only care about one thing:  Profits.

And how to get them.

If they are under-teaching, or inflating grades, they are effectively abusing the system - oh, and the students they're supposed to be teaching.  Fleecing money out of students, especially given the skyrocketing costs of college in the first place, is bad, and the students sure as hell shouldn't be accountable if they are the victims of what, in a rational world, would be deemed "criminal acts".

Some say students are "lazy" and that's why we offshore jobs.  Never mind that it's about costs and even CEOs lying to congress to help themselves to begin with and how does one compete with $2/hour, but all of these factors must be considered.  If the "benign" for-profit entities are screwing students, then there's a VERY big problem.

We need real reform, now. If all these issues politicians and corporations claim to be real genuinely are.  And on some tech forums, there are plenty of qualified people who have been economically displaced thanks to offshoring.  They've reported ageism as well.  So, no, anybody saying Americans are lazy -- BULL.  There is too much circumstantial evidence that already throws that empty claim out the window.)

[mlaiuppa]

07:50 PM on 05/25/2011

They make those profits off the taxpayer.

A huge percentage of their students use student loans and government grants to pay for courses, then they drop out and default on the loans. So these companies are sucking up taxpayer dollars.

[cratic497]

02:13 PM on 05/25/2011

must not be using union labor. Because the complaint sounds like the state colleges too

[ixington]

02:38 PM on 05/25/2011

Unlike private, for-profit colleges, the reputation and funding for state colleges are coupled with the quality of education afforded their students. The for-profit institutions possess mission statements concerned with investor profit rather than educational attainment. In short, these institutions fail their charges miserably while providing their shareholders with taxpayer subsidized profit.

[Just a passerby]

02:55 PM on 05/25/2011

Seriously, don't even bother. Every time one of these stories is posted, some mouth-breather will claim that all colleges are the same, all a scam, blah blah blah blah.

This alternates with shills writing that they went to the scammy college in question and are very successful, it's a great program, and so on.

[Just walkin the dog here]

12:38 PM on 05/25/2011

Nothing says higher education like "Corinthian Colleges of Santa Ana".