Collapse of For-Profit “College” Empire Victimizes Students and Taxpayers
28 campuses suddenly closed. 16,000 students locked out. 10,000 of them in Southern California. Stock value that peaked at $33 in 2004 and is now worth less than two cents a share. And if it doesn’t sound right to mix stock value and college, read on.
Those 28 campuses just closed were the remnant of an empire that was, until recently, even larger. Today’s closures included all remaing Everest College(s) and those operating under the WyoTech trade name. They included West L.A., Alhambra, Long Beach, City of Industry, Ontario, Reseda, Anaheim, Santa Ana, two more in California, multiple campuses in 14 other states, one in Oregon and one in Hawaii.
“For-profit school’s failure means no degree, no money.”
“Students left with nothing after closure.”
Those are typical of the headlines, nationwide, this morning.
“Everest College students were completely blindsided when their school joined its owner, the for-profit Corinthian College, in closing its doors. Now the students are out the money they spent on classes and have little chance of earning a degree.” That’s a concise summary from an Iowa television story.
They must have been as blindsided in Des Moines as they were in L.A. and Orange County. TheEverest College(s) website is still up, still trying to enroll you and take your money for online or on-campus classes:
Of course, it’s an instant artifact of the modern cyber world. Though it might still take your money, since it is a for-profit business, failed or not.
Less than 24% of Corinthian/Everest students were repaying their student loans. There were questions about the schools’ financial dealings. The low rate of student loan repayment jeopardized the possibility of future students getting loans to go there. Everest College(s) had their academic accreditation threatened.
One Everest College graduate went public after spending $37,000 on a computer science degree that he said was “worthless” on the job market.
All that caused the US Department of Education to put the for-profit empire under scrutiny in 2004, which became “heightened oversight.” DOE is fining the Santa Ana-based empire $30 million for irregularities and violations. The schools claim that’s what brought them down. The sudden closure includes 150-year-old Heald College, upon which the modern for-profit multi-campus national chain was based.
The Military Times reported April 10th that attorneys general in nine states were calling for the dismissal of student loans, with no repayments required, for students who had attended Everest College(s) in their states.
There has been a sudden proliferation in 21st century America of for-profit storefront and industrial park presences operating under the guise of colleges. It’s everything from the ubiquitous, heavily-advertised University of Phoenix empire, whose target market is working professionals seeking advanced degrees for workplace promotion eligibility, to the dubious trade school calling itself a “college.”
Much of this move to for-profit “colleges” was propelled by the Iraq and Afghanistan wars, because hundreds of thousands of returning troops had earned expendable education benefits.
Much of this move to for-profit “colleges” was propelled by the Iraq and Afghanistan wars, because hundreds of thousands of returning troops had earned expendable education benefits.
Much of this move to for-profit “colleges” was propelled by the Iraq and Afghanistan wars, because hundreds of thousands of returning troops had earned expendable education benefits.
Plenty of capitalists were waiting, perhaps salivating, as the Bush-Chaney administration changed the government’s and the military’s operating paradigms – things changed, across the board, with no-bid contracts and no need to be pre-qualified. It was unprecedented in US history.
In education, that included opening the doors to for-profit business to get on a gravy train of public funding with broadened definitions of college and institutions eligible to receive direct and indirect federal funds. It included boundless opportunities for businesses to set-up shop as “colleges” to take GI benefits and receive federal student grant and loan funding for what had been within the realm of trade school education, or been straightforward training programs that companies once provided workers while they paid them as employees.
The failure of the Corinthian/Everest empire is a tragedy for those 16,000 students who are left holding the bag to repay student loans for classes and programs they cannot complete – and that they must repay without the benefit of the education they sought to be qualified for better-paying jobs. It’s likewise a tragedy for the previous students who learned too late that the programs in which they were enrolled, or that they completed, were not marketable in the job world.
It’s also a tragedy for the taxpayer who funds student loans, only to have the money disappear into the bottomless black hole of banks and business investors, because that was never what that money was for.
Colleges should never be for-profit businesses. Whether institutions offering academic degrees or trade schools offering certifications, their courses should be transferable and their programs accredited, AND they should never exist for the purpose of enriching stockholders. Paying dividends on stock shares is antithetical to the mission of educating students to lead better lives and advance human civilization.
It’s time to put ALL the for-profit “colleges” on notice:
- Convert yourselves to non-profits
- Qualify all your programs and all the classes you offer as fully transferable
- Gain and maintain full accreditation from the recognized, nationally-affiliated authority in your region (and not from some goofy, fly-by-night “board” you can set-up yourself)
It’s time to require these things be done immediately. Anything calling itself an educational institution that does not comply should be ineligible to receive any taxpayer-based funding, including direct grants, Pell and other grants to students, and student loan funding.
Of course, if someone wants to attend some flaky ersatz college – whether a for-profit business-owned “college” or a fundamentalist religious indoctrination establishment (since it’s time we addressed taxpayer support for those places, too) – or anything else that cannot meet the simple criteria above – let it be that individual’s choice and their business, and they can pay for it without the subsidy of public funding or publicly-guaranteed loans.
It’s time for these changes, before people are burned again by profit takers and profit seekers operating in an arena where they should never have been.
You can read more about the sudden closure of Corinthian/Everest colleges in just about every morning paper in America. Here are some links:- A good report showing impact beyond L.A., from KCCI, Des Moines, Iowa.
- Bloomberg news, emphasizing the business details, including charts ~
Larry Wines
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The TRUTH will set you FREE.
