Charlie Mitchell

After ITT collapse, for-profit ‘colleges’ finally get attention

It’s too soon to cue up the wonderful Etta James for a refrain of “At Last,” but the U.S. Department of Education has taken a step toward crimping the abuses too many students and all taxpayers have faced at the hands of “colleges” where the priority is profit.

The dance started last week.

First, the U.S. Department of Education removed ITT Technical Institute from its list of schools (“companies” would be a better word) eligible to receive student-aid money through grant and loan programs.

In response, ITT closed its offices, displacing 40,000 people who were actively taking courses in electronics, nursing and many other fields along with 8,000 employees.

If the ITT response was calculated, it was smart. It triggered an immediate hue and cry. Sympathy is certainly due a person already in a $60,000 financial hole for a training program who is told, “Sorry. All done. We’re out of here. Bye.”

You can bet phones started ringing on Capitol Hill — that great protector of for-profit higher ed — with pleas to keep the money flowing. Again, the Department of Education did not order ITT to close, cancel classes or fire people. But that’s how the narrative developed.

Congress is incredibly well-lubricated with mail-order university money. The feast on the unwary may well resume if elected officials’ knees buckle and the cash giveaway is reinstated.

At this point, a pause for a point and a disclosure. There are real success stories that can be tied to the Waldens, the Phoenixes, the Virginia Colleges and the Southern New Hampshire universities. Some people have benefited from relationships with these firms. They take many corporate forms and operate along a sliding scale of ethics. The disclosure is that I derive income from a traditional brick-and-mortar university.

But facts are facts and former U.S. Sen. Tom Harkin, D-Iowa, developed many related to the “corporatizing” (money grab) of higher education a few years ago. They include:

▪  These schools enroll no more than 13 percent of all college students nationwide, yet receive 25 percent of all federal education aid dollars.

▪  The same degree can cost twice as much or more at a corporate college.

▪  More than half those who start programs don’t finish, but still have the debt.

▪  Mississippians may think the $600,000 salaries paid to the CEOs of the state’s two largest public universities are high, but way back in 2009, the average annual salary for the top five for-profit college CEOs was $7.3 million each.

Finally, a breakdown of how these schools spend their money:

▪  22.7 percent on marketing, advertising, recruitment, admissions.

▪  19.7 percent pre-tax profit.

▪  17.2 percent cost of instruction.

Few businesses can claim their profits were greater than what they spent on goods or services, but these “colleges” can.

So how well-lubricated is Washington? Consider this from a USA Today report.

Former President Bill Clinton was paid $17.6 million as “honorary chancellor” by Laureate Education, the parent of Walden University, during the six years leading to Hillary announcing her White House bid. Nothing corrupt about it, mind you. It’s one of those arrangements the Clintons discontinued merely so people would not be confused.

Walden students owe $6.8 billion and citizens will pay if they don’t. How great it must be to operate a business where you send past-due accounts to the U.S. Treasury for payment.

It is a very cynical situation.

To a frustrated working person struggling against monthly bills, the bright and happy, well paid and “successful” people depicted in all those billboard and TV ads present an ideal. Climbing the ladder looks easy. A call is placed, a friendly voice answers and with a couple of signatures (96 percent of corporate school students receive federal aid), a dream is about to come true.

But it dissolves into a nightmare too often when degrees or certificates are not completed or found to be worthless. Then another big bill arrives seeking payment for, well, nothing.

The Department of Education took a micro-step, really, when it pulled the plug on ITT based on the fact that more than half of its students’ loans were in default. ITT was having other troubles, too. Upstarts were intruding on its market share, for one thing.

Yes, people are hurting. But any move to stem what amounts to pure exploitation of people and public funds is praiseworthy. There’s every reason to believe that Congress — aware of these abuses for years — will cave. There’s just too much cash at stake and not nearly enough people care about this ongoing scam.

We’ll keep Etta James on pause.

Charlie Mitchell is a Mississippi journalist. Write to him at cmitchell43@yahoo.com.

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