Saturday, June 9, 2012

"Make them wallow in their grief!" More tales from the for-profit college wasteland

It's time for yet another round with one of my personal bete noires, for-profit colleges.

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'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.


Anonymous said...

Dear Sir,

With much grief and concern, I write this letter because I find myself corner in a situation which I believe should have never happens in this country of ours. In the year 2005 I, a believer on the advancement of people through education, signed with a local for profit college, EVERET COLLEGE, and after 8 years of aggravation and false promises, I concluded that only the so call “College” has advance while us, the people whose only sin has been to believe that one can better himself through education, only have a tremendous debt which obviously will not be able to pay during our life time to show for. At the beginning with the promises that upon completion there were good paying jobs, this institution offer their own financing at outrageous interest and later, help to obtain government lending.
I have previous experience in nursing but, wanted to become a Register Cardiac Sonographer, in pursuing that dream, went to Everest College where was told that the prerequisite was an Associate Degree as a Cardiovascular Technician, did that an then signed for the Cardiac Sonography program upon completion.
I have finished all requirements and have taken and obtain all the require licenses, not due to then but by hiring outside tutors. All the promises made of great salaries, employment after completing the program have been false, worse yet, many institution hospitals and private institutions are not willing to hire graduates from this “college” because it is considered a substandard not credited school. Today, I am settled with a 50,000.00 dollars debt in a job that has nothing to do with my Degree.
I have a worthless degree which basically makes me unemployable in the field that I studied since the so call “College” has no state validation.
The institution who lend the funds to study, Sallie Mae, have imposed payments schedules which actually takes fifty percent of my paycheck so, I work as an EKG Technician, I am left with very little to solve my everyday payments and comprises and fine myself working to pay Sallie Mae.
I have looked into continuing my education at local State College but, due to the fact that the “so call College” I attended is not accredited, my credits are not transferable, I will have to start all over again probably ending with a debt over 100,000.00 dollars still making 12 to 13 dollars an hour.

I write this letter as form of complain hoping that this state will finally advocate for us instead of the corporation whose only interest is to fill their pockets with absolutely no concern to the damage they are creating, with the changes made by Congress to the “Bankruptcy Law” making students loans non-dischargeable, the downward spiral of the student’s loan abuse will continue. These schools must be regulated, fine whenever false promises are made, and be obligated that cannot open doors until full accreditation is obtain.
I have repeatedly requested copy of my transcript, professor credentials and course description with no avail, my petition has not been answer situation which does not allow me to at least try to enroll in a reputable institution
I know that for my case, it is too late, but please let’s stop the damage these schools are doing to our fellow Floridians.
I am organizing some past students of this institution and plan in a near future file a Class Law Suit hoping that this action will stop these institutions from keeping creating more damage while getting richer every day. We have launched a complaint before the Florida Better Business Bureau regarding this matter but, have not received any follow ups from them


Anonymous said...

This is Mr. White. You misquoted the affidavit. There wasn't a bonus structure. It was a pay structure that essentially equaled an extra $5000 to your salary for every 4 students you were suppose to enroll. So, 36 was $35,000 a year, 40 students was $40,000 a year. Just FYI, so the facts are clear. Career Colleges, per the Higher Education Act can't pay bonuses, or even Salaries for that matter. We were hourly, and our overtime was "donated" to the college to get the job done, ie, we weren't paid for our overtime.

David I. Waddington said...

Thanks, Mr. White. I've made the correction.