"The first thing to know about the free market is that it's not free, and turning Wall Street loose on college students will turn them into chattel, effectively indentured to investors." ~Jim HightowerAh, yeah, that's happening, more and more, faster and faster. No question.
You may have seen the internet banners: return to school in your 30s, 40s, 50s, and beyond. Or become an air-conditioner fixer, nurse, dental hygienist, security guard, commercial artist, truck driver, paralegal, or IT guru. Better yet: get that MBA or PhD! Still looking for work? Retrain for the new economy.
Everybody wants to teach you something, and you'll find their snappy sales pitches on billboards, sports stadiums, bus wraps, subway stations, magazine covers, TV screens and public urinal ads. Hell, our local NFL team, the Arizona Cardinals, plays at the University of Phoenix Stadium—no peewee sign in the end zone for them! UP's parent company, the Apollo Group, shells out about $7.5 million a year for naming rights to the big aluminum muffin. The University of Phoenix itself has no sports teams, anywhere, but $7.5 million is walk-around change for Apollo, which, in addition to UP, owns more than a half-dozen other large for-profit colleges and universities. Based in Phoenix, the Apollo Group, a Fortune 500 company, made about $740 million last year. I guess you can run schools like a business.
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In today's brave new world of learnin', the classroom is being hijacked by Wall Street charlatans who value education as a profit-maker, rather than a social good. The college where I learned from Mr. Olsen, one of those teachers you remember your whole life, certainly had to account for revenues and expenditures, but those decisions weren't controlled by predatory private-equity peckerheads, like the CEO in Boca Raton whose fundraiser showcased the smooth stylings of Mr. 47 Percent. Mitt Romney of course views education through the same tunnel vision he sees everything: as a profit center. The other "bottom lines," social and environmental, are lost on him; he's what forester Aldo Leopold condemned in A Sand County Almanac: "[He] assumes, falsely I think, that the economic parts … will function without the uneconomic parts."
Candidate Romney has embraced the gargantuan venture capitalist education industry in a big way. He added Charlie Black and William Hansen, Beltway lobbyists who've represented for-profit colleges, to his campaign team; other Romney advisers from the industry include Rod Paige of Chartwell Education Group and Nina Rees from Knowledge Universe, Michael Milken's enterprise. Not surprisingly, Romney has also taken bucketfuls of Corp U cash. They know a Romney presidency (yeah, I threw up a little too) would slow down or even end congressional hearings into for-profit education, led by Sens. Dick Durban (D-IL) and Tom Harkin (D-IA), who, along with the White House, have been shining a bright light on the industry's shortcomings.
The upshot of their investigations is that the corporate schools' performance record sucks, yet they're more expensive and, on average, their CEOs take home seven times more than the five highest paid public university presidents. What also distinguishes many for-profit goliaths is that they're frequently in trouble with the authorities. Wiki any of them, and there's usually a "Controversy" section filled with multi-million-dollar lawsuits. At Sen. Harkins' hearing this summer, he introduced a scathing report (250-page PDF), the result of a two-year investigation:
"In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation," Mr. Harkin, an Iowa Democrat who is chairman of the Senate Health, Education, Labor and Pensions Committee, said in a statement on Sunday. NY Times
The Democrats' public focus on the for-profit college industry, whose profit relies nearly 90 percent on public funds, has resulted in new federal regulations, something the industry would like to reverse. And that's what Romney would do, hence the cash to his PAC and $40 million spent lobbying since 2007.
Large donations are troublesome because they suggest the donor will have outsized influence on the politician if elected. It's more troublesome when these great friends own businesses that seek to avoid government accountability for harms to the American people. And a great example of that is the for-profit college industry, which has engaged in more than a decade of waste, fraud, and abuse with taxpayer and student money. Public ReportScrew what education should be about, says Wall Street. Take out the guts but leave the economic scaffolding, where profit reigns—not educating a community, not fostering an informed and active citizenry, not advancing research or social equity, including economic improvements for all, not a select few. Check their boards of directors: financial players, not education experts. It's the same blinkered conviction that steered Romney's Bain years, it ruined people's lives, and it's a pretty shitty shaper of educational values. In addition to fleecing students (who swap horror stories in online communities), Wall Street's pursuit of coin in the classroom also threatens traditional state and private institutions. A Romney administration would run education the Bain Way—mindfuckingly worse.
In short, Governor Romney is pushing for much more privatization in higher education. Given his way, Romney's plan could transform our system of public higher education, once the envy of the world, into a disconnected tangle of diploma factories. These institutions would spit out into our increasingly complex and challenged society an increasing number of poorly trained students.… HuffPoWalmart Education
Here in Phoenix you can't escape for-profit higher ed. Heck, this is the headquarters of Corporate U's 1,600-pound guerrilla, the University of Phoenix (UP), which John Sperling started in 1976—a former beatnik, Reed College and Berkeley grad with a PhD in economic history from Cambridge. He took UP public in 1994 and became a billionaire. Today UP's modern cement and glass "campuses" blanket the Valley of the Sun, seemingly plopped down at every freeway interchange. They're selling education to almost a half-million people in those buildings, but when UP leaves the complex could just as easily be filled with stockbrokers or bank executives. That would be fitting.
UP is all over the
country world now, more than 200 campuses, and they've unquestionably altered education's landscape—the most noticeable change being the mind-numbing growth of humungous for-profit schools: business, technical, medical and art colleges, multiplying like Cialis-nibbling rabbits. In the last decade alone, commercial colleges, universities and trade schools have grown 225 percent, increasing enrollment to 2.4 million students, and reaping revenue of $32 billion, most of it paid by you and me. Since 2001, for example, their share of Pell Grants, already in short supply, has grown from $1.5 billion to $7.5 billion. Collectively, Sen. Harkins' report says, the growing for-profit education industry has a terrible track record—providing crap service, exploiting students and bilking taxpayers. Sure, for-profit schools work for some students, but overall they suck and they've gotten bigger and suckier faster. Mitt Romney would continue the trend toward majorly suckdom.
[Romney] wants to run colleges and universities as if they were businesses, believing that our government would work better it were run like Bain Capital. Put another way, Mr. Romney's private equity tunnel vision may work well in the clubby atmosphere of the corporate boardroom, but is a prescription for the rapid spread of educational mediocrity that will retard social and economic progress. Mr. Romney's worldview charts a path toward more—not less—social inequity, which, if history is a reliable teacher, suggests a future of broken dreams and social chaos. HuffPoSome students clearly benefit from the University of Phoenix, ITT, DeVry, Argosy, Kaplan, Carrington, Capella and other national juggernauts, and a few franchises have decent records, including UP's move toward transparency and accountability. It's like some charter schools do a fine job, although many do no better than the average public school and some perform a lot worse. I have friends who value the degree they received from the University of Phoenix (the chipper grads in the TV ads say "I'm a Phoenix!"), and I know administrators there who are dedicated professionals. And some arguments their lobbyists make hold water, like reaching "nontraditional students," including working adults. The model can work but it often doesn't, and the Romney-Ryan vision for higher ed would insure that it doesn't, by reversing some of the progress toward more transparency, accountability and honesty—undoing the administration's new regulations.
Corporate U's lobbyist in the 2010 PBS program College, Inc. says public universities have "turned their back" on students who don't come from wealthy elite families, so the for-profits are filling that need. Bull! You can't say traditional schools are too expensive and then charge more, which is what they do—on average $10,000 more for a four-year degree, and many are twice as costly. Two-year trade and vocational schools are even more expensive: three to five times the cost of community colleges. They'll counter that they don't receive state appropriations so they have to charge more, which might be understandable if their academic performance and job placement were top-notch. They're not, not by a long shot.
Public institutions haven't "turned their back" on anyone; they simply can't accommodate the growing numbers of people seeking a college diploma, mostly because their budgets have been ravaged by legislatures like ours in Arizona, dunderheads controlled by ALEC and other privatization goons, who've cut higher education nearly 22 percent in the last two years while student population keeps rising, to the point Arizona State University is the nation's largest school. The solution is not to turn higher ed's challenges over to Wall Street, but to fund public schools adequately. It's not hard to figure out who's not too keen on that: Wall Street firms and their GOP sycophants like Mitt Romney who preach market solutions, at the same time they push austerity programs at the state level to undercut their competition—public institutions.
The crisis can be healed by letting the magic market (aka Wall Street) lay its hands on the funding of college education. Get the government out of the student loan business, they preach, and let global speculators invest directly in students by covering their tuition. In other words, turn students into just another Wall Street commodity to be purchased by the wealthy. Jim HightowerThe gang that couldn't teach straight
Increasingly, for-profit higher ed resembles, in style and substance, the corrupt gang that took down the mortgage industry—tricking victims into buying risky products, bankrupting customers, fleecing taxpayers and rewarding the crooks. One of the most effective education lobbies in D.C. today, led by at least 14 former congressmen, represents for-profit enterprises owned by private-equity firms; trust me, they're not there working on behalf of teachers and students. In addition to pushing their own deregulation agenda, reminiscent of tearing down the financial firewalls in the '90s, the corporatists cripple public-sector institutions, applying money and pressure to:
• water down higher-ed regulations, accreditation, and oversight;
• shift funds from classroom instruction to marketing, recruitment, management salaries and investor returns;
• weaken valuable public-sector programs like Pell Grants;
• exploit the GI Bill and veterans' vulnerability;
• conceal their crappy graduation, job placement and loan default rates;
• drive students into bankruptcy, indenturing them to Wall Street's schools and banks;
• steer federal funding and opportunities toward CorpEd, where benefits mostly redound to managers and investors, not teachers and students, and certainly not the general public.
We can expect for-profit mouthpieces to continue producing studies defending their existence, but they can't bury the fact that many of them charge more for an inferior product, at the same time most of their profit is subsidized by taxpayers. The people running the Walmarts of education do well, students and the public not so much. That's the ugly core of the education "industry" that's metastasizing, with help from the Wall Street friends of Mitt "Borrow money from your parents" Romney.
Championing the competitive nature of the free enterprise system, Romney has famously advised college students to "shop around" for the best loan rates. As for his educational philosophy, Mr. Romney seems to be crusading for private for-profit institutions of higher learning, outfits that process a large number of students with efficiency and good returns on investment. HuffPoMany for-profit colleges, trade schools, and ethereal online campuses are owned by Goldman Sachs and other ethical Orcs. Argosy University, which has 19 campuses nationwide, is owned by Education Management Corporation (EDMC), the nation's second largest big-mart retailer of higher ed, next to Apollo Group. EDMC's major investors include Goldman Sachs (41 percent) and two private-equity firms: Providence Equity Partners and Leeds Equity Partners. The majority investors at powerhouse Corinthian Colleges, which operates more than 100 strip-mall schools, include Goldman Sachs, Credit Suisee and other usual suspects. The head investor at Chancellor University, a Cleveland-based school, is former General Electric CEO and Romney supporter (and economic truther) Jack Welch, famous for his hacksaw and employee relations. And it wouldn't be a real Wall Street story without junk-bond king Michael Milken, who's co-founder and chairman of Knowledge Universe, another giant for-profit.
The Sootz on The Street haven't entered this market because they've suddenly grown a pair of ethical balls and are concerned about the state of education in America. Our higher-ed isn't failing academically; truth is, the U.S. has some of the finest public, nonprofit, and private colleges and universities in the world, one reason so many foreign students study here. Public institutions, though, for kids whose parents can't send them to a private school, are just woefully underfunded, thanks to GOP austerity policies that Romney would accelerate, forcing universities to raise tuitions and pursue corporate ties—naming rights to buildings, stadiums, endowed chairs, entire programs. In effect, even public universities are becoming less public and more corporate, which has prompted more than a few ethical and legal concerns.
The classroom competition and higher tuitions also leave an opening for the for-profit sector, but while UP and others may be successful at lobbying, marketing, and investor returns, they charge a lot more to do their most important job a lot worse. More than 75 percent of students in for-profit schools won't complete a degree in six years, double the failure rate at public colleges. The University of Phoenix is even worse: more than 90 percent of their students fail to graduate in six years. All told, more than half of for-profit students never earn a degree, and nearly half of the dropouts only stay in school four months. Heck, we used to derisively call them diploma mills, but as Charlotte Allen points out, they're non-diploma mills.
Then there's the students who do graduate from UP, ITT, Walden, Argosy and others. Although the recruiter shoveled some shinola like "90 percent of our graduates land a job right out of school," many students have a tough time finding work because their diplomas aren't as competitive. Some entry-level jobs the graduates do land, like working at Romney's Staples, don't pay enough to cover the student loan, which is why their default rate runs almost 20 percent, twice that of public-university students. At Corinthian Colleges, which agreed to a $6.5 million settlement with the California AG in 2007 because they lied about student job numbers, the default rate is 40 percent. The result is a crapload of students in debt, unemployed and increasingly homeless. On average, students who attend for-profit enterprises leave school $29,000 in debt, compared to $10,500 for public institutions. Neither figure is anything to brag about, and the entire student loan debt now tops $1 trillion. Failure to repay the loan can land a student's ass on the Feds' shit list, depriving them of public housing, food stamps or other federal assistance.
They're called for-profit for a reason
The GOP-Wall Street circle jerk about "competition holding down the cost of education," is first-class bunk, as high tuitions are common throughout the industry, but you wouldn't know that if you only listened to the Heritage Foundation and other invisible hand goobers:
Entrepreneurial educators are attempting to resolve this dilemma by using new business models and new ways of learning, such as through online courses, to slash the cost of a college-level education. These innovations offer the prospect of a fundamental restructuring of higher education with a sharp reduction in costs—a revolution that would be a boon to students seeking to acquire the skills they need in today’s economy.Yeah, they "slash the cost" so much they're often twice as expensive. A degree from ITT's main campus in Indiana costs $68,000, a heckuva lot more than nearby Indiana University ($38,000), which, last I checked, is a pretty damn good school. A one-year nursing degree at Corinthian's Everest College, which probably won't get you hired as a nurse, costs $30,000. An online credit hour at the University of Phoenix costs almost $500; the same hour at a place called Harvard is less than $200. One handy tool the Department of Education established, which Wall Street probably doesn't like, is an "Affordability and Transparency" website where you can compare the cost of public, private and for-profit schools.
Two-year trade and vocational schools are especially lucrative, with tuitions three, four or five times that of community colleges which, unfortunately, are turning students away because they don't have space—foisting people onto the more expensive for-profit sector. I've worked with community colleges for decades and consider them local treasures, but rather than give them the resources to meet the demand, which is what President Obama announced with his $8 billion Career Fund, we're seeing well-orchestrated attacks on community college faculty as lazy, ill-prepared and overpaid. The solution, according to private-equity firms trying to squeeze community colleges out of existence, is something like California Assembly Bill 515, which, had it passed, would have privatized the state's community college system.
America's community colleges are in a near-death cycle after decades of budget cuts designed to weaken the public commons… Rather than acknowledge the years of economic neglect and the new austerity that have left the public community colleges in a most precarious fiscal position, the recent swarm of corporate news articles instead seems aimed at demonizing public colleges, their faculty, students and staff… So, while the neglect of the public sphere is devastating to students, the private for-profit subprime colleges can hardly contain themselves now that they have helped foster and create the material conditions for future profits. truthoutFollow the money
To no one's surprise, Mitt Romney promotes private for-profit universities as the solution to classroom scarcity and higher tuitions. Get this: His fundraising co-chair in Florida is Bill Heavener, CEO of Full Sail University, who Mitt all but fellated in public for "hold[ing] down the cost of education." He called Full Sail a model for the nation, just like he said Arizona is a model for immigration policy. Rachel Maddow pointed out that Romney's commercial for a Wall Street company, which is what Full Sail is, neglected to mention that the school's two-year degree in video game art costs $81,000, twice the cost of many good public institutions. Way to hold down costs, Mr. Heavener!
Of all the hundreds of for-profit colleges in America, Full Sail has the third highest net price … more than any non-profit or public college. In that light—Full Sail may be the third most expensive college in our nation—Romney’s assertion that Full Sail keeps costs down is nothing short of astonishing. And Full Sail has at best a mixed record in training students for productive careers. Many attendees and observers say the instruction at Full Sail is of poor quality, and one if its programs boasts a 14 percent on-time graduation rate. Public Report
Conveniently, during Romney's cheerleading for the corporate vultures that Full Sail represents, he also didn't mention that graduates leave with an average $59,000 federal loan debt—five times the average debt for public-school students. Nor did Romney bring up the money his Super PAC, Restore Our Future, received from CEO Heavener and TA Associates, the private-equity firm that owns Full Sail. Within the for-profit higher-ed world, Full Sail is the second largest donor to mostly GOP candidates, trailing only Apollo Group. CEO Bill Heavener contributed at least $85,000 to Romney, and C. Kevin Landry at TA Associates shelled out $120,000.
Another Public Report followed the stench of this money even further. Hold your nose. It turns out TA Associates was a corporate benefactor of the fund Solamere Capital, which was launched with a $10 million investment from, you guessed it, Mitt Romney! It gets smellier: The founder and managing partner of Solamere is Romney's son Tagg; another partner is Spencer Zwick, head fundraiser for Romney's 2008 and 2012 campaigns. Heh, I see what you did there.
Part 2, next week: If for-profit schools have such a sucky track record, how do they convince millions of students to sign up, including more and more veterans? And how would Mitt Romney's policies further undermine traditional schools at the same time they help Wall Street gain more access to public education funds?