In a previous post, I explained one of the softer sides of the for-profit sales pitch, which is basically "Go to college the EZ way." Go to school in your PJs, in your house, on your computer, in your car (this is America, after all)--anywhere but in the good ol' classroom. Education Connection, a sales lead generating agency for the for-profit colleges, has enlisted Shannen Doherty to make this pitch, but unknown fluorescently-white-toothed American actresses are on the payroll as well (see video below).
Yet beyond the twilit realm of pyjamas advertising, there is a mean, sharp edge to the sales pitch, and we have found out a bit more about it thanks to a recent lawsuit against Everest College, one of Corinthian Colleges' (a giant for-profit university chain) outlets in Utah.
In a deposition covered in the Deseret News and in a great article by Salon.com's Andrew Leonard, former admissions officer Shayler White revealed that a lot of his job was basically telemarketing. White would make 600 calls per week, and Corinthian would pay $80 for each sales lead generated (presumably) by the go-to-college-in-your-PJs folks.
What's really surprising, though, is what happened once White got the prospects on the line:
[Admissions officers] were instructed to use "power words" like "career," "professional" and "successful" to sway potential recruits.
"The tactics also included questions designed at putting down the prospective student, making them feel hopeless, bad about their current situation and stuck at a dead end, in order to make enrolling in school look like the best solution to the problem."
“The ultimate goal was to essentially make them wallow in their grief, feel that pain of having accomplished nothing in life, and then use that pain as their ‘reasons’ to compel the leads to schedule an in-person meeting with an Everest admissions representative.”
White also indicated that Everest admissions representatives received incremental salary bumps of $5000 based on the number of students they enrolled.
In addition to persuading students to sign on, White's job included another challenge: dealing with people who were close to defaulting on their student loans. Everest costs a lot of money, and its former students default at a rate of about 20%. This, of course, wouldn't really be a problem for Corinthian if it weren't for pesky regulations which threaten to cut off the government student loan cash if default rates are too high.
Default rates are not the only things that threaten the government cash pipeline. As Andrew Leonard notes, colleges cannot receive more than 90% of their revenue from government-backed loans. This doesn't cause a problem for most colleges, but it's troublesome for places like Everest due to the fact that their students are so impoverished. The solution is simple: Corinthian, which runs hundreds of colleges, just originates the loans themselves. The default rate on these loans is 50%, but it is still apparently profitable. Every $1 of private financing, after all, frees up another $9 in government aid.
Nothing about this surprises me. I've had my eye for a long time on for-profit colleges for a long time here at Social Issues, and I've documented their low graduation rates, high costs, and deceptive tactics at some length.
This issue is close to my heart because I come from an economically depressed region of Nova Scotia. As of 2006, unemployment ran at about 12% and median income was $18,000. A lot of young people want to leave and they want to find the security of a job as quickly as possible. As a result, for-profit recruiters found fertile ground in my school. I attended a glitzy presentation by DeVry and remember thinking, at the time, that going to DeVry was a great idea. You finished school fast and got a good-paying job in the tech sector. A good job was definitely what I wanted, and there were a lot of my schoolmates that wanted it and needed it a lot more than I did. Of course, one could get similar training for a fraction of the cost at community colleges, but community colleges didn't come in making big promises and giving flashy presentations. The for-profits had, and still have, the advantage of the hard sell. And, as we've seen in the case of Corinthian, it's sometimes a very hard sell indeed.
Corinthian is at the darker end of the for-profit college pantheon; people don't always do that badly out of for-profit colleges. Some of my schoolmates found good jobs through DeVry and the other private colleges they attended. But the fact remains that the target population of the for-profits is the people who are the least well informed and who can least afford to pay. At the end of the day, that's what bothers me most about the for-profit system.