For-profit colleges swindle students

Education comes second to institutional income at a steep price

His tenure at the Art Institute came to an end on Easter when he was hurt in a serious car accident. Unable to type for six months, Pantzke decided he'd instead study photography on his own. In just 18 months at the Art Institute, he'd run up $26,000 in debt and burned through an additional $65,000 of his G.I. Bill benefits — with almost nothing to show for it.

Yet if Pantzke got away, there were plenty of other servicemen where he came from. A story by Bloomberg news caught a recruiter from Ashford University visiting a wounded warrior barracks at Camp Lejeune in North Carolina. It seems that injured veterans — notably those with head injuries — are particularly receptive to the for-profit sales pitch. The story's opening line said it all: "U.S. Marine Corporal James Long knows he's enrolled at Ashford University. He just can't remember what course he's taking."

Federal data shows that for-profits are increasingly targeting veterans. In 2009, they took in almost as much military money as public colleges did — though they were educating just one-third of veteran students. Last year, eight of the top ten educational institutions collecting G.I. Bill benefits were for-profit, taking in a stunning $626 million.

Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
courtesy of Barmak Nassirian
Barmak Nassirian, former official with the American Association of Collegiate Registrars and Admissions Officers: "Over-advertise, oversell, overcharge, and under-deliver. They found a system where the pitch goes to one guy and the bill to someone else."
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."
courtesy of Rick Kriseman
Rick Kriseman, a Florida State representative, represented Mary in her suit against Argosy University: "When the school did not have those [internship] slots, they found reasons to either dismiss the students or to make it so uncomfortable for them that they left on their own accord."

"I think sometimes the emphasis is on signing up the student as opposed to whether or not the student is really ready to be successful at that school," says Holly Petreaus, an official with the Consumer Financial Protection Bureau and wife of General David Petreaus. "The top 10 recipients of GI bill aid, eight are for-profit schools, and they are very heavily engaged in marketing to the military — quite successfully, frankly."

It's all about the Benjamins

The University of Phoenix will never be confused with Yale. According to one 2010 report, 90 percent of its students fail to graduate within six years.

Still, by pure monetary standards, former CEO Todd S. Nelson was a success. During his tenure, he tripled revenue for the school's parent company, the Apollo Group. Enrollment surged to more than 300,000.

Unfortunately, he accomplished this the old-fashioned way — by cheating. Since 1992, it's been illegal to pay recruiters based on how many students they bring through the door. Phoenix did it anyway until two recruiters blew the whistle, initiating a suit that would ultimately cost the school $88.3 million in settlements and fines.

Under pressure, Nelson was forced out in 2006, walking away with a generous $18 million severance. Founder John Sperling put a polite spin on the exit, saying only that Nelson was "preoccupied" with stock price to the detriment of the school's long-term health.

Yet if Nelson's profit motives were too lusty for Phoenix, they were a match made in corporate heaven for Goldman Sachs. The Wall Street bank had partnered with two private equity firms to buy EDMC. Nelson was hired as the company's new CEO. Former Maine Gov. John McKernan Jr. — the husband of U.S. Sen. Olympia Snow — was named chairman of the board. Over the next five years, the company's revenue would nearly triple to $2.8 billion.

Last year, Nelson took home $13.1 million in salary and stock. By the standards of for-profit executive pay, he was working on the cheap.

Gregory Cappelli, his replacement at the University of Phoenix, received $25 million last year. CEO Robert Silberman of Strayer Education raked in an astounding $41.9 million in 2009. Yet even this pales next to Jonathan Grayer, the former CEO of Kaplan University, who walked away with a $76 million severance package — courtesy of Kaplan's parent company, the Washington Post.

By comparison, Harvard President Drew Faust collected a meager $875,331 in 2010.

Nelson's bad-boy practices have predictably caught up with him. Last year, the Justice Department and attorneys general from five states charged EDMC with fraud for paying recruiters based on the money they generated. Six more states have joined the suit.

EDMC claims its sales pay is not just based on bodies enrolled, but also on such things as business ethics, professionalism, and job knowledge. Kathleen Bittel would beg to differ. She was an EDMC recruiter when Nelson arrived, and will readily attest to the change in atmosphere.

Over the next three years, the sales staff increased from 950 people to more than 2,600. "Once Goldman Sachs took over and they brought in [Nelson], everything changed," she says. "Everything became much more cutthroat. It was just more oppressive and very high pressure.... They were watching you constantly. We used to joke it was like being on the cotton plantation and they were the overlords coming by on their horses. The only thing they were missing were the whips — but they had the whips verbally."

Like Lawrence, Bittel had studied psychology and proved adept at forging bonds. She'd gone back to school in her 40s to support her family of four after her husband got cancer. She understood the difficulties of raising kids, working full-time, and going to college. At first, she admits to "drinking the Kool-Aid," believing Argosy's online program could help people like her.

But after six months on the job, she was allowed to take Argosy courses for free. That's when she discovered she'd aided a bait-and-switch. Many of the features she heralded to students were barely functional or didn't exist. The Worldwide Professionals Network, where students could find graduate mentors in their field, was nothing more than a bulletin board. Promised MP3 downloads of classes also didn't exist.

« Previous Page
Next Page »
My Voice Nation Help

This article has to be the worst piece of one-sided journalism I've read in a long time! 

Having attended Argosy I feel I can speak to the education I received.  It would appear the author specfically found stuents who are disgruntled with their educational experience no matter the thousands of others who are quite happy with the education they have received. 

The people speaking out here can say anything they like about their experience... including lie... because it makes for more emotional reading!  It gets you riled up and feeling anti-for-profit school!

The schools, of course, cannot defend themselves because, by law, they cannot disclose any student information.  So for-profit schools make nice easy target for bored jouranalists looking to bump up the drama factor for their news rag.  For all anyone knows, these students could have been lazy, never studied, spent their financial aid on a new stereo, big screen tv, bought a new wardrobe... whatever.  But, the school is still guilty. Not the students! 


It's funny how accountability always falls on someone else and not you.  Same old story... "It's not MY fault!  It's THEM!  I'm innocent!"  We'll never get the real story... half the remarks made here about these school are halve truths as well!


You get from an education what you put into it.  You don't have to put effort into anything in life and still pass.... DUH! I know a good chunck of people at the U of M right now who pass their classes by going to homework sites to have their papers done for them... but of course it's a non-profit school so the education is much better!  

If you want something genuine out of any education... you put effort into it!  Don't blame the school... it falls to the student!


Every instructor I've ever had at Argosy was extemely intelligent, well versed, and taught with dedication and passion. The work required was on par with other institutions I've attended as well.  Having graduated from a Big Ten school I can say the education I recieved at Argosy was just as valuable and even more flexible in many ways. I never felt under challenged or that my grade was just "given" to me.  I never felt like I was being pressured into getting more financial aid than I needed.  I never felt pressured to enroll at Argosy either.  Everyone was very genuine and accommodating.   It's easy to report on something you know little to nothing about and make it look like it's crap for the sake of publicity.  (Like a bully picking on a kid they know can't fight back!)


Even the comments below are from people who have absolutely ZERO knowledge of the schools or the industry.  They read this article and immediately assigned blame and passed judgement without ever having met someone who attended, talked to the shool or a student enrolled. 

It's funny how non-profit schools follow the exact same proceedures for student financial aid, students acquire the same if not more amount of debt, but now are somehow immune to this criticism.  Is it because there are investors on one end that makes student debt that much different?


For-profit schools are not bad like this author what's everyone to believe and the education they provide is just as good, if not better than many non-profit schools!


This article is just depressing!

Truth_Teller_1 topcommenter

Having graduated from two top Universities (Lehigh and Penn State) with degrees in Engineering and Computer Science, I fell qualified to judge these ‘for profit’ schools.


Having direct experience with (and interviewing many of their graduates), I can say that many of the graduates are not college material, and they didn’t receive a ‘real education’.


There’s something about ‘going to school’, getting immersed in the subject.   Yes, there are parties and good times, but there is an environment to being in school.  You get something more in your head than a collection of facts.


The one thing that’s been proven here:  College is not meant to be a vo-tech.


For profit schools exist for four reasons: 


#1.  The mistaken reason that everyone should go to college.


#2.  Because of #1 our government is going to give anyone who has a pulse – a student loan.  A loan that cannot be discharged by bankruptcy.  A loan that will live with them probably till they’re 40 or 50 or death.


#3.  The student loans became the lifeblood of For Profit schools.


#4.  The economy is so bad that people are willing to try anything – including getting $25,000 to $40,000 in debt for a $12/hr job.   When you realize the job market is saturated, and these jobs don’t pay a liveable wage – well “your gonna carry that weight for a long time “(the Beatles).


We used to call these schools: “high school with ash trays” or “clown college of comic book knowledge”.  But hell, you can’t even smoke anymore.


Get a culinary arts degree?  How about TSA?   Criminal Justice (security guard), Medical Coding, Veterinary assistant?  


Twenty years ago all of these jobs were for HS graduates, now you’re going to get a ‘degree’.   But read that degree carefully:  Most if not all of those credits are non-transferrable, the school prints those degrees in the same way our government now prints money.


It's obvious the commercials are aimed at 'trailer trash' or 'ghetto' folks, whom they will help apply for a student loan.


These scammers need to be PUT OUT OF BUSINESS.


Education from Penn State, huh?  Are you a child molestor too?  I mean... I'm applying the same logic you are in your points.  Your non-profit education seems to have really prepared you to comment on something you don't understand.


and every single student they've ripped off need to be paid back WITH interest.


 @mikehext Not only should these schools be put out of business, but those who created and perpetuated this fraud knowingly should be put behind bars. There's a reason we have jails.