Stories & Grievances
Outrage Over The Toxic Rhetoric of For-Profit College Companies Spurs Challenge For Change
Shannon Croteau was 11 classes away from a degree from Kaplan University Online when she learned she was out of financial aid, owed $30,000 and that the degree would be worthless in her state of New Hampshire. Croteau had been told by Kaplan -- a lucrative chain of "for-profit" colleges owned by the Washington Post Company -- that she could make more than $65,000 a year as a paralegal. Getting financial aid from the government was easy, they said, and earning a degree would be a snap.
January 27, 2011
Disgruntled Students Petition Washington Post Company to Close Kaplan U.
By Derek Quizon
A petition urging the Washington Post Company to make changes at its lucrative Kaplan University, or shut it down, has garnered more than 7,000 signatures.
The petition, which appears at Change.org, an online petitioning platform, has drawn more than 5,000 signatures today alone, and the number is rising rapidly.
Each signature generates an e-mail message to Donald E. Graham, chairman of the Washington Post Company, and several other Post officials. The messages ask them to stop admissions to the for-profit university until it develops an "independent, third-party" system to investigate student complaints.
The petition was posted on Change.org a little over a week ago, and was started by a group of about 25 people who describe themselves as disaffected former Kaplan students.
The leader of the group, 40-year-old Shannon Croteau, said she was swindled by the university when she enrolled in its paralegal bachelor's-degree program. Ms. Croteau said the company had stuck her with $30,000 in debt for a loan she never took out, and refused to offer her any more financial aid, claiming it had "run out." She later discovered that her program had actually been an associate-degree program that isn't accredited in her home state of New Hampshire.
A spokeswoman for Change.org, Carol Scott, said there was no way to determine how many of the petition's signers were students. The Washington Post Company did not immediately return a call seeking comment.
Tell Kaplan and The Washington Post To Stop Cashing In On Low-income Students
Targeting: Donald Graham (Chairman, Washington Post Co.), Mark Harrad (VP of Communications, Kaplan Inc.), Andrew Rosen (CEO, Kaplan, Inc.),
Donald Graham (Chairman, Washington Post Co.), Mark Harrad (VP of Communications, Kaplan Inc.), Andrew Rosen (CEO, Kaplan, Inc.), Rima Calderon (VP–Communications and External Relations, Washington Post Co.), Rima Calderon, Ann McDaniel (Senior VP, Washington Post Co.), Warren Buffett (Member, Washington Post Board of Directors), Katherine Weymouth (Member, Washington Post Board of Directors), Christopher C. Davis (Member, Washington Post Board of Directors), Barry Diller (Member, Washington Post Board of Directors), Thomas Gayner (Member, Washington Post Board of Directors), and Ronald Olson (Member, Washington Post Board of Directors)
Started by: Shannon Croteau Owner of Takenumdown2010
Kaplan University Online promises convenient college degrees paid for with easy federal aid. But for many students, all they deliver is debt, unethical practices and misleading claims. Who cashes in? The Washington Post Company, which owns the lucrative chain of colleges and lends its stellar reputation to a scam for low-income students.
Shannon Croteau was 11 classes away from a degree from Kaplan University Online when she learned she was out of financial aid, owed $30,000 and that the degree would be worthless in her state of New Hampshire.
Croteau had been told by Kaplan -- a lucrative chain of "for-profit" colleges owned by the Washington Post Company -- that she could make more than $65,000 a year as a paralegal. Getting financial aid from the government was easy, they said, and earning a degree would be a snap.
"For-profit" colleges like Kaplan and the University of Phoenix target low-income students, promising easy degrees and online courses. Instead, Croteau, and millions of other students, end up victims of an industry that siphoned off more than $4.3 billion dollars of federal student aid in 2008-2009 alone. Few students graduate -- the University of Phoenix's graduation rate is 9 percent. Those who do are often drowning in debt, or find that the lucrative jobs they'd been promised don't exist.
Even after an explosive government report uncovered deceptive practices at 16 out of 16 colleges investigated, the for-profit industry - including Washington Post Co. Chairman Donald Graham - denies all wrong-doing and continues to fight government regulation.
A group of former Kaplan University Students are banding together to set the record straight. Led by Shannon Croteau, they're demanding that Graham, and the Washington Post Company, shut down their broken chain of colleges until changes are made.
Top 10 (Cringeworthy) Things You Didn't Know About Kaplan U
by Carol Scott · February 22, 2011
Veterans, single moms and low-income parents -- all hustled by the Washington Post Company into signing up for college classes of questionable quality and a lifetime of debt.
Shocking, but true. This tragic story happens again and again for students at Kaplan University, the chain of colleges owned by the Washington Post that has drained billions of dollars from federal financial aid.
On the ground, a growing movement of students are calling on the Washington Post to stop cashing in on low-income students. Former Kaplan student Shannon Croteau created a campaign on Change.org demanding change from the Washington Post Company. Columbia University students are also using Change.org to call on Columbia President Lee Bollinger to reform Kaplan or give up his spot on the Washington Post's Board of Directors.
As a battle rages in Congress over how to stop for-profit colleges from ripping off students, here's a handy list of the Top Ten (Cringeworthy) Things You Didn't Know About Kaplan U.
10. Kaplan is a cash cow for the Washington Post. According to the Washington Post's 2010 federal SEC filing, Kaplan "is the largest operating division of the Company, accounting for 58% of the Company's consolidated revenues in 2009." If you're keeping score at home, that 58 percent amounted to $1.54 billion. Source: The Washington Post Company
9. Tax dollars meant for low-income students pad Kaplan's pockets. The same federal filing shows that Kaplan pulled in $1.3 billion in federal student aid in 2009 alone.
8. Kaplan promises students a better life, but nearly 1 out of every 3 students end up choked by debt. New data from the Department of Education shows that 30 percent of Kaplan students whose federal loans came due in 2008 defaulted within three years. This means that Kaplan raked in government cash, while the students it purported to "help" succumbed to the debt. Some individual campuses are even worse: a Washington Post Kaplan Career Institute in Massachusetts reported a 37.5 percent default rate. A Kaplan Career Institute in Ohio reported a 39.5 percent default rate. Source: New York Times and Bloomberg
7. Kaplan courses cost as much as 14 times more than similar courses at community colleges. When striking a deal in 2010 to offer classes to California community college students, Kaplan announced a special California rate of $645 for a three-credit class - down from $1,113. How much were the same credits at a community college? $78. Also, unlike community college credits, there was no guarantee that these Kaplan credits would transfer if students decided to switch over to a four-year college. The deal fell through later that year. Source: Inside Higher Ed
6. Kaplan tricks students into enrolling through "pain" and "fear." Secret training documents used by Kaplan teach recruiters to literally scare potential students into enrolling. "Keep digging until you uncover their pain, fears and dreams," the manual reads, and then sucker-punch them into signing up for class. "If you can help them uncover their true pain and fear... You dramatically increase your chances of enrolling this prospective student. Get to their emotions, and you will increase the urgency!" Source: Kaplan University, via Senator Tom Harkin, D-Iowa
5. Most students at Kaplan drop out. Fully 69 percent of Kaplan students who enrolled at the school over a one-year period from 8/08 to 7/09 had dropped out by August 2010, Iowa Senator Tom Harkin reported last fall. According to the U.S. News and World Report, only 33 percent of Kaplan students graduate within six years. Source: Sen. Tom Harkin, U.S. News and World Report
4. Kaplan targets veterans fresh from national service, leaving many in the dust. Recruiters namedrop Washington Post board member Warren Buffett as they court newly-returned veterans, seeking the cash GI Bill funding. It works: Kaplan is No. 3 in the country for students funded by veterans' benefits. It doesn't, however, work for many veterans who find themselves stuck in low-wage jobs instead of the lucrative careers they were promised. Take Iraq vet Scot Reynolds, who graduated from Kaplan 2009 and now works as a telemarketer for $8 an hour plus commission. "My income has drastically dropped," he told Bloomberg News. Source: Bloomberg
3. Kaplan targets single mothers, low-income students and people of color. Former Kaplan administrator and instructor Carlos Urquilla-Diaz told the New York Times that he recalls a PowerPoint presentation showing African-American single moms raising two children by themselves as ideal targets for Kaplan. Source: New York Times
2. Federal and state authorities have repeatedly had to step in and investigate Kaplan. The Government Accountability Office, Florida's Attorney General, and the Department of Education have all seen fit to launch investigations into Kaplan's practices. The GAO study found that all 15 colleges investigated in its study made deceptive claims to applicants. Florida's investigation is ongoing. The Department of Education is currently trying to restrict the amount of federal aid for-profit colleges can receive. Kaplan was also sued by the U.S. Equal Employment Opportunity Commission in December for allegedly discriminating against job applicants by race. Source: Barron's, U.S. Government Accountability Office, Sun Sentinel, Bloomberg
1. When former students call for justice, Kaplan plays the distraction game. Led by Shannon Croteau, a group of former Kaplan University Online students launched a campaign on Change.org in January to call for change at the behemoth for-profit college. But instead of responding to the group's plea for a third-party mediator to process student complaints, Kaplan's response has been to avoid the issue. Kaplan spokesman Ron Iori has tried to distract from the petition's success by telling the New York Times that many of the signers weren't students.
But as former Kaplan student Angelique Abeare-Welch pointed out, this response "completely misses the point, which is that Kaplan is a fraudulent college wasting taxpayer money. Does he not realize that some of the signers are taxpayers themselves? They do not need to be former students or employees to be fed up with Kaplan!"
Posted: February 17, 2011 12:00 PM
The Toxic Rhetoric of For-Profit College Companies
José Cruz, Vice President for Higher Education Policy and Practice, The Education Trust
Posted: February 17, 2011 12:00 PM
The Huffington Post
For-profit college companies are indignant. They are outraged that the U.S. Department of Education is developing standards to define what it means to "prepare students for gainful employment in a recognized occupation," the key term of a long-standing prerequisite enabling those companies to qualify for federal Title IV student financial aid, which includes Pell Grants and Stafford loans.
And the for-profits are spending millions in a marketing campaign to let their indignation be heard, aided by a very diverse team of well-compensated, newfound friends -- all of it to distract from the dubious quality of some of the academic programs they offer.
Interestingly, their anti-regulation argument is not the typical claim that regulations hamper innovation and increase transaction costs. No -- they tell us their real concern is that the proposed gainful employment regulations represent an indiscriminate assault on the educational "choices" and "opportunities" available to non-traditional and low-income students.
In fact, the Education Department's proposed regulations are actually just a timid attempt at accountability, ensuring that the students' and taxpayers' investment actually supports education leading to job earnings that are reasonably well-matched to the cost of that education.
Currently, for-profit colleges need only check a box certifying that they prepare their students for gainful employment. That's right -- enforcement relies on the honor system. And the honor system has worked very well for the for-profits. During the past decade, their enrollments have grown by 236 percent. In one year, the sector captured over $24 billion in federal subsidies. But that honor system has not worked so well for students: The few who actually graduate from a for-profit institution with a bachelor's degree have a median debt four times higher than that of bachelor's degree holders from public colleges.
The for-profits also rake in a high level of federal dollars relative to the number of students they serve. While they enroll only 12 percent of the nation's college students, they consume 24 percent of all federal student loan dollars. And their proportion of loan defaults is even higher: for-profits produce 43 percent of all defaults on federal loans.
So how draconian are the proposed "gainful employment" regulations?
Not very, as it turns out. To be declared ineligible to receive federal student aid, programs must produce student debt burdens above 12 percent of students' total income and above 30 percent of their discretionary income, and they must have loan repayment rates below 35 percent. Yes, the government is willing to live with 65 percent of loans not being repaid by students who have enrolled in very expensive academic programs. What about the programs that are just shy of meeting this toxicity test? In this case, the institutions would simply be required to limit enrollment growth until they get their risks under control.
Clearly, the proposed standards do not threaten legitimate choice and opportunity. What they may do, however, is to stop legitimizing -- through the availability of federal subsidies - academic "choices" that are so toxic they only constitute an illusion of "opportunity."
Unless the Education Department gives in to the toxic rhetoric of the for-profits and debilitates the already timid regulations.
It is important for the Education Department to remember that oftentimes when corporations and trade organizations spend millions articulating their concern for the public, it is a strategy to reduce the risk of regulation by selling the idea that they can self-regulate. British Petroleum presents itself as aiming "for no accidents, no harm to people, and no damage to the environment." Halliburton claims as a core value the aim "to be welcomed as a good corporate neighbor in our communities... to validate our progress through transparency and reporting." McDonald's touts commitment to "Nutrition and Well Being."
So it's no surprise that the Association of Private Sector Colleges and Universities -- the Washington group representing the for-profit industry -- stresses a "passionate commitment to our members and the students they serve" and a "dedication to integrity, accountability and excellence in career and professional higher education."
For-profit colleges that earn their profits through innovation in educational delivery, rather than through under-investment in student success, have nothing to worry about. These companies should welcome the proposed regulations, since removing the worst actors will protect the sector's reputation and provide an opportunity for market growth.
The last time a powerful corporate sector gained rapid growth by aggressively targeting the underserved with high-risk products -- benefiting from lax government regulations and a lack of appetite for enforcement -- the result was the subprime mortgage crisis. The banks' arguments were eerily similar to those of the for-profit colleges: Beware of unintended consequences that will limit "choice and opportunity."
The truth is that the bankers were asking us to protect toxic assets -- and now the for-profit colleges are asking us to do the same.
Inaction is not an option. We have to rein in those that abuse our social investment and prey on our underserved population.
Choice and opportunity -- as concepts, as values, as concrete manifestations of the American Dream -- deserve more respect.